VW, city get complaints of nonpayment

VW, city get complaints of nonpayment

July 7th, 2010 by Mike Pare in Volkswagen

Volkswagen and a city panel have received a number of complaints about companies working on the automaker's assembly plant not getting paid on time after two contractors filed for bankruptcy.

"We've received a number of liens of subcontractors and suppliers not getting paid," said Mike McMahan, the Chattanooga Industrial Development Board's attorney, on Tuesday.

Siskin Steel & Supply Co. Inc. has sued Volkswagen's Chattanooga operations and the board, saying it is owed more than $660,000 for materials it supplied the plant under construction.

Siskin attorney John Konvalinka said in the Hamilton County Chancery Court suit that the VW plant site is owned by the development board and leased to the car maker for 30 years.

Earlier, Southern Fabrication Contractors, a Chattanooga company supplying structural steel for the VW project, filed for Chapter 7 bankruptcy. Court documents show Southern Fabrication owes Siskin $710,000.

Mr. McMahan told the development board VW has hired a Chattanooga law firm to address the nonpayment problems.

"They are being addressed, obviously not as quickly to suppliers and people as they'd like to have," the attorney said.

He said that under a memorandum of understanding between VW and the city concerning the plant project, the automaker is required "to indemnify in respect to this."

Mr. McMahan said he is "confident in the long run all these will be resolved."

A VW spokesman didn't have any immediate comment Tuesday.

Volkswagen is building a $1 billion auto plant that is to produce a midsize sedan new to the American market. The plant is expected to start production early next year.

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