Association asks court to consider claims of truckers

CHAMPAIGN – A truckers' association has asked the U.S. Bankruptcy Court in Danville to consider the claims of truckers in dealing with the involuntary bankruptcy of CX Roberson and PFT Roberson.

The Owner-Operator Independent Drivers Association, which has more than 129,000 members in the United States and Canada, submitted a memorandum supporting the involuntary bankruptcy requested by several creditors of the two trucking concerns.

In the memorandum, the association said the companies – which were divisions of Roberson Transportation – owe drivers at least $1,625,000 that was supposed to be held in escrow. So far, the association said, none of that money has been returned.

The 10 creditors who filed the involuntary bankruptcy petition in August also argue it's important for U.S. Bankruptcy Judge Gerald D. Fines to keep the case alive for the sake of truckers and other unsecured creditors.

"Without a bankruptcy case and an independent trustee, the unsecured creditors will receive nothing and will have no hope of receiving anything," the creditors claimed in response to the companies' motion to dismiss the case.

Attorneys for the companies and for Kevin Cleary, the private trustee hired by Roberson to settle the companies' claims, countered it was best to leave the matter in Cleary's hands.

They said he had liquidated most of the assets and had contacted many former employees and potential creditors. It would be "extremely time-consuming, expensive and inefficient" for a federal bankruptcy trustee to step in at this point, they claimed.

At a Sept. 20 hearing, Fines allowed Cleary, a Chicago-based managing partner with Fort Dearborn Partners, to continue his work settling Roberson's claims. But Fines denied a petition from Cleary and the companies to dismiss the involuntary bankruptcy petition.

A hearing has been set for 10 a.m. Nov. 16 in Room 120 of the Federal Building in Danville to further consider the case.

The case stems from Roberson Transportation's sale of its CX Roberson and PFT Roberson units to Indianapolis-based Celadon Group and Des Moines, Iowa-based Annett Holdings, respectively, in January.

In supporting the creditors' claim, the Owner-Operator Independent Drivers Association stated that about 325 owner-operator drivers had federally regulated lease agreements with the Roberson firms.

As part of those agreements, drivers were required to put up $2,500 to guarantee their performance. They were also required to contribute from 4 cents to 5.5 cents per mile to a maintenance reserve account.

All that money was to be held in escrow, with all the unused escrow funds, plus interest, to be returned to the driver within 45 days of termination of the independent contractor agreement.

However, the association said it had received "numerous complaints" from drivers seeking assistance in recovering their escrow funds.

According to the memorandum, the association's corporate counsel, Belinda Harrison, wrote to Cleary in April seeking return of the escrow funds collected by Roberson.

In the letter, she cited a court decision that held "escrow funds collected from owner-operators by motor carriers were subject to a statutory trust and were not property of the bankruptcy estate."

"The practical effect of this decision is that Roberson, or you acting as assignee for Roberson, must return to owner-operators their escrow funds before secured creditors are paid, as these funds do not belong to Roberson and cannot be used to satisfy the debts of the debtor's estate," her letter said.

The association's memorandum indicated the letter did not have the desired effect.

"In a telephone conversation subsequent to this letter, Mr. Cleary stated that the escrow funds would not be returned to owner-operators," the memorandum said.

The association said it figures the Roberson companies collected an average of at least $5,000 in escrow funds from each owner-operator driver. Altogether, the companies owe the drivers "at least $1,625,000, plus interest," the memorandum said.

In an Aug. 30 filing, attorneys for the companies and for Cleary indicated PFT Roberson and CX Roberson are $3.54 million to $5.23 million short of having anything to pay off unsecured creditors.

LaSalle Bank, a secured creditor, had a blanket lien on virtually all the assets of PFT and CX and was owed about $18 million by them and related companies, the filing stated.

Meanwhile, the 10 creditors who brought the involuntary bankruptcy suit have asked the court to delve further into Roberson's transactions.

"There needs to be a complete and total disclosure of all payments made to (Roberson's) insiders within one year of the petition date," the creditors claimed in a Sept. 14 filing.

"For example, it is understood that certain insiders of the debtor have started a new business. All transactions between the debtor and this new business should be divulged," they stated. "In addition, an investigation as to causes of action against the debtor's officers and directors should also be undertaken."

The Sept. 30 order by Fines allowed Cleary to proceed with certain tasks, such as paying employees remaining on the payroll at Roberson's headquarters in Mahomet and paying independent contractor Douglas Wilson to negotiate settlements for personal injury and property damage claims.

But Fines ordered that by Oct. 7, Roberson and Cleary produce documents requested by the creditors, and that by Oct. 17, Cleary make himself available for deposition. Ray Urbanik, a Dallas-based attorney for the creditors, said Thursday the documents were produced and Cleary's deposition did take place.

"The petitioning creditors are still in the process of examining the situation at Roberson, and the hearing ... is still on for Nov. 16," Urbanik said.

Roberson Transportation had been a major employer in Mahomet since 1997, and in Farmer City before that. Last year, Roberson had about 1,150 drivers, with about 330 of them owner-operators and the remainder company drivers.

Sections (2):News, Business
Categories (3):News, Miscellaneous, Business

Comments

News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments