Contractor accused by N. Hempstead of not completing pool work files for Chapter 11

A contractor that North Hempstead Town hired to renovate the pool at Clinton G. Martin Park has filed for bankruptcy almost a week after town officials began disputing the company's work at the New Hyde Park facility.

Wantagh-based Gramercy Group Inc. filed for Chapter 11 bankruptcy May 17  in federal court in Central Islip. The move means North Hempstead must hire another contractor to finish the work that town officials believe Gramercy overlooked. The bankruptcy also means North Hempstead Town cannot seek legal action against Gramercy for the work, for which the town is withholding $1.97 million from Gramercy.

Town council members were scheduled Tuesday to take the next step in going to court with Gramercy, but "due to the recent news that Gramercy Group has filed for bankruptcy, the town is legally prohibited from moving forward with its default action against the company,” said North Hempstead spokeswoman Carole Trottere. 

Michael McKenna, a New Jersey-based attorney representing Gramercy, said two unexpected situations happened recently that led to its bankruptcy.

“They had a verdict against them in Hawaii that was very surprising,” McKenna said Tuesday, referencing Gramercy's 2016 lawsuit against Ewa Beach, Hawaii-based D.A. Builders that ended earlier this month. “That verdict and the nonpayment by the town [of North Hempstead] really put them over the edge.”

Gramercy owes D.A. Builders $6.7 million in a legal judgment and about $450,000 in attorney fees to two Hawaii-based law firms, according to court documents filed May 17.

Gramercy had an estimated annual revenue of $18.2 million as of July 2018, according to a Dun & Bradstreet Inc. report.

McKenna said that despite the bankruptcy, Gramercy will likely try to complete as much as it can of the contracted work the company has underway. McKenna said he’s unsure whether the company will attempt to finish the Clinton G. Martin Park pool contract.

Trottere said North Hempstead Town is searching for other companies to finish the pool work and has no timetable for when it might be done, but officials have said the incomplete work will not interfere with the pool's opening day June 15. The town will likely hire several companies to complete separate tasks, Trottere said. 

Town officials sent Gramercy a letter earlier this month alleging the company did not finish all the work by the agreed upon April 24, 2018, deadline. The letter gave an 18-point list of unfinished work, including no Americans with Disabilities Act-compliant spaces in the restrooms and changing rooms, no gravity overflow drain lines installed for the main pool surge tank and a missing double check valve for the pool's fire alarm system. 

Town officials said they are withholding $1.97 million of the original $21 million contract from Gramercy because of the unfinished work.

McKenna said Gramercy officials dispute those claims and weren't notified of alleged incomplete work until five months after the pool opened to the public.