Derecktor Shipyards Connecticut has idled most of its workforce at its facility in Bridgeport, Connecticut, according to local media. Local officials told the Hartford Courant that the yacht builder is not taking on new projects and is repositioning the company to make it profitable.

Workers who lost their jobs have been told that the shutdown could last at least two or three months. But officials last month told the Connecticut Post that they were already lining up new tenants for the Bridgeport Harbor shipyard, which is owned by the city.

Paul Derecktor, company CEO, told the Connecticut Post in early September that it was “tough times” for the firm, saying that there were no new construction projects and very little refit work. He said the closure was not tied to any lawsuit.

Last year, Derecktor delivered the 66m (218ft) Cakewalk V, the largest yacht built in the US in more than 70 years. In 2008, the shipyard filed for bankruptcy protection when two owners sued over the costs of production and delivery times. The cases associated with that filing were closed this August.

But the owner of Cakewalk V last month filed a new US$12m civil lawsuit against the shipyard, alleging breach of contract during the construction of the vessel. Contractors are also threatening to sue over unpaid work, according to the paper.

The state of Connecticut has invested heavily in Derecktor in recent years in order to diversify the shipbuilding industry away from submarine construction.

Last year, Connecticut’s Department of Economic and Community Development approved a $1m matching grant to secure $2m in federal funds for improvements to the 23-acre shipyard. The Connecticut Development Authority previously loaned Derecktor $2.2m in 2002. Approximately US$1.7m is outstanding.

The Courant said that both agencies are in discussions with Derecktor, though officials declined to comment on the specifics.

“I’m hoping they can weather the storm and come up with a plan,” Marie O’Brien, president of the Connecticut Development Authority, told the paper.

City officials said that the builder is behind US$100,000 in rent and other expenses.

Donald Eversley, director of the Office of Planning and Economic Development in Bridgeport, told the Courant that the yard remains an attractive location for shipbuilding “should Derecktor conclude their activities in Connecticut.”