WHEELING — Major construction projects in the cities of Wheeling and Moundsville remain at a standstill as the fallout from the general contractor’s bankruptcy filing has created legal obstacles that continue to prevent work from resuming.

The new $9 million Wheeling Fire Department Headquarters and the new $10.5 million Moundsville City Building remain partially completed after the general contractor for these jobs — &build, a PCS Company — filed for Chapter 7 bankruptcy in late March. Construction at these sites along 17th Street in East Wheeling and on Sixth Street in Moundsville has ceased since then.

The municipalities have been waiting on the release of surety bonds in order to be able to proceed with the completion of the new multimillion-dollar buildings. The bonding company is responsible for choosing the new general contractor for these projects.

But a battle in U.S. Bankruptcy Court over pre-petition balances from these projects — particularly the required 10% retainer from each project, as well as the accounts receivable amounts — has created another hurdle in the road toward having the bonds released.

This unresolved issue is a legal fight between the surety company, Atlantic Specialty Insurance Company, and the Chapter 7 trustee. Caught in the middle are the municipalities with unfinished projects.

Earlier this week, attorneys representing the cities of Wheeling and Moundsville filed a response to the motion in an effort to resolve these outstanding issues, urging the court to determine that the remaining contract balances are not subject to turnover to the Chapter 7 trustee. Attorneys G. Lofstead III and W. Eric Gadd of the law firm Spilman Thomas & Battle are representing the two cities in the matter.

“We need hammers swinging on these jobs,” Lofstead said. “Wheeling’s got fire trucks scattered throughout the city waiting for their new headquarters to be completed. Moundsville has also been waiting for four months now. But because of this, we’re stuck.”

The delay is creating additional problems, officials have noted. Moundsville City Manager Rick Healy reported that since the construction site at the new city building has been “sealed up” in the wake of the work stoppage, there are locations where mold has begun to grow, which will need to be remediated.

In June, Judge Suzana Krstevski Koch in U.S. Bankruptcy Court for the Northern District of Ohio granted relief to the cities of Wheeling and Moundsville from an automatic stay triggered by the bankruptcy filing, allowing the cities to terminate their contracts with PCS &build in order to proceed with another contractor. Attorneys for creditors have argued that the termination of these contracts eliminates the ability of the debtor — PCS & build — to perform construction services necessary to earn the unpaid balances on the original contracts — including the retainers and accounts receivable amounts that are being disputed.

“It’s our position that they (the Chapter 7 trustees) are not entitled to those,” Gadd said. “We’re doing what we can to find a resolution. Nothing would make us happier than to be able to proceed with these projects, but each of us is being held hostage over this issue.”

The Wheeling and Moundsville projects are not the only major municipal projects caught in a standstill over this general contractor’s Chapter 7 liquidation bankruptcy filing. A $3.2 million capital improvement project in Cadiz — the Harrison County Home Addition by the Harrison County Commissioners — is also involved in legal proceedings with the Cleveland-based contractor doing business as PCS Builders LLC, as are other multimillion-dollar projects in Ohio.

Contractors, subcontractors and service providers have been listed as creditors in the bankruptcy filing. There are hundreds of creditors, with at least 30 West Virginia-based creditors.

Officials in the cities of Wheeling and Moundsville have been nothing but cooperative with all involved parties through the bankruptcy proceedings, according to Lofstead, noting that the cities have been willfully accommodating with needs of other involved parties without having to go through court orders or other formalities.

“Both cities, I believe, have fully complied with every request they’ve received,” he said. “Both facilities have been made available for inspection.”

The retainers for the projects are 10% of the contract, which typically is released after a final inspection of the completed work. The pre-petition unpaid payment applications submitted by the debtor are $564,590 for the Moundsville project and $100,112 for the Wheeling project.

“The cities find themselves between the proverbial rock and a hard place,” the attorneys for the cities stated in their recent response. “Unfortunately, the cities continue to suffer because they find themselves in the crossfire of what in reality is a battle between the surety and trusty over which party has a superior claim to the contract funds. Meanwhile, no work is being done with regard to the West Virginia projects.”