Mare Island Dry Dock Files for Bankruptcy to Reorganize and Find Buyer

The California shipyard seeks to keep operations going amid loss of key U.S. Coast Guard contract

Published on Feb. 26, 2026

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Mare Island Dry Dock (MIDD), a California shipyard, has filed for bankruptcy in an effort to reorganize its business and find a buyer. The company lost a key U.S. Coast Guard contract, leading to layoffs, but is now exploring a sale or partnership to keep the shipyard operating.

Why it matters

The bankruptcy filing by MIDD highlights the challenges facing smaller, regional shipyards in competing for lucrative government contracts. The shipyard's continued operation is crucial for the local Vallejo community, which has relied on it as an employer. The outcome of MIDD's reorganization efforts could impact the future of shipbuilding and repair capabilities on the West Coast.

The details

MIDD filed for bankruptcy on February 14 after losing a U.S. Coast Guard contract to maintain the icebreaker USCG Healy. The company says it was the low bidder but the Coast Guard chose Vigor Marine in Portland, Oregon instead. The bankruptcy will allow MIDD to keep 50 employees working, down from 65 layoffs in December. MIDD is now exploring a sale of the shipyard as a 'going concern' and is in discussions with several potential buyers. The company believes a merger or acquisition with a larger organization would allow it to compete for larger contracts.

  • MIDD filed for bankruptcy on February 14, 2026.
  • The company laid off 65 workers in December 2025.

The players

Mare Island Dry Dock (MIDD)

A California shipyard that has provided repair and maintenance services to the U.S. Coast Guard, Military Sealift Command, National Oceanic and Atmospheric Administration, and commercial clients since acquiring the facility in 2013.

Steve DiLeo

The president of Mare Island Dry Dock.

Vigor Marine

A shipyard in Portland, Oregon that was awarded a U.S. Coast Guard contract to maintain the icebreaker USCG Healy, which MIDD had previously serviced.

John Garamendi

A U.S. Congressman representing the Vallejo, California area where MIDD is located.

Nimitz Group

A California-based developer that has teamed up with a local developer to propose the Vallejo region as a Maritime Prosperity Zone.

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What they’re saying

“Ensuring the shipyard's continued operation is crucial for both the shipyard itself and the community.”

— Steve DiLeo, President of MIDD (maritime-executive.com)

“Going into reorganization is a necessary step toward a sale that will support the interests of all stakeholders.”

— Steve DiLeo, President of MIDD (maritime-executive.com)

“A sale or partnership would better position the company for bidding.”

— Steve DiLeo, President of MIDD (Vallejo Sun)

What’s next

MIDD is exploring the sale of the shipyard as a 'going concern' and is currently engaged in 'productive discussions with several potential buyers'. The company is also optimistic about bidding on a five-year maintenance contract from the U.S. Coast Guard for the icebreaker Polar Star.

The takeaway

The bankruptcy filing by Mare Island Dry Dock underscores the competitive challenges facing smaller, regional shipyards as they vie for lucrative government contracts. The outcome of MIDD's reorganization efforts will be closely watched, as it could impact the future of shipbuilding and repair capabilities on the West Coast.