San Antonio-based Zachry Holdings, Inc. has settled its lawsuit with Golden Pass LNG over its partnership to build a $10 billion liquified natural gas terminal in Sabine Pass.
Zachry filed for bankruptcy protection in May for itself and 20 subsidiaries in an effort to exit its role as lead contractor on the project, which the company said was beset by billions in cost overruns.
The settlement will allow Golden Pass and its partners, QatarEnergy and ExxonMobil, to resume construction on the project and hire back some of the thousands of workers who were laid off as a result of the bankruptcy. The partners have previously said the project is already 75% complete.
In a statement Wednesday, Zachry Holdings CEO John Zachry said the settlement “resolves all of the issues we set out to address regarding the Golden Pass LNG project when we initiated our restructuring process earlier this year” and “paves the way for us to move forward as a stronger company, better positioned for long-term growth and success.”
Zachry was forced to lay off more than 4,000 employees working on the project, according to its filings with the Texas Workforce Commission. According to the San Antonio Business Journal, the company was later hit with a class action lawsuit by workers claiming that Zachry did not provide the legally required amount of notice before dismissing them.
Many of those employees may now be rehired. Golden Pass said in a statement Wednesday that the settlement allows its construction partners “to ramp up site construction activities” and focus on “getting people back to work, including local workers and vendors and progressing this critical energy project.”
When filing for Chapter 11 protection in May, Zachry described “significant challenges and disruptions” starting with the pandemic and including “international geopolitical issues” that have resulted in “significant financial strain while meeting targets and keeping the project appropriately staffed.”
By June, the dispute had begun to get ugly, with Golden Pass accusing Zachry of holding the contract “hostage.” Zachry in turn accused Golden Pass of “potential fraud” in filings before later asking the court to restrict public access to those filings.
In his statement, Zachry said that the company would now turn its focus to “completing and exiting from our Court-supervised process,” and will continue to operate its other projects “without interruption.”
Zachry Holdings, also known as Zachry Group, is one of two companies created in 2008 from the H.B. Zachry Corp., founded in 1924 by Henry Bartell “Pat” Zachry in Laredo. It bills itself as “a leading provider of turnkey engineering, construction, maintenance and fabrication services” with $5.4 billion in operating revenues in 2023 and 20,000 employees that have worked on “high profile projects across the U.S. and the rest of the world.”
Zachry Construction, run by John Zachry’s brother David Zachry, is a completely separate entity, with road, airport and other infrastructure projects around the country.
