Trucker tries to pull out of skid
WTB Inc.s creditors vote on plan; Bankruptcy Court confirmation hearing is scheduled in September
Kim CromptonJuly 30th, 1998
WTB Inc., the financially troubled Spokane trucking company that at one time commanded a fleet of 280 trucks operating nationwide, is seeking approval of a reorganization plan that it hopes will allow it to emerge from bankruptcy protection.
The U.S. Bankruptcy Court here in late June approved a disclosure statement prepared by the company, and creditors began voting on the reorganization plan about two weeks ago. They have through Friday, July 31, to cast their ballots and until Aug. 14 to file objections to the plan. A hearing is set for Sept. 2 on possible confirmation of the plan.
WTBs attorney, Dan ORourke, couldnt be reached for comment about the prospects for approval of the reorganization plan. However, a Bankruptcy Court case administrator said last week that early returned ballots were running mostly in favor of the plan.
The companys president and founder, Garry Padrta, says hes confident the plan will be approved and that the company eventually will return to full health. WTB filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in March 1997.
We feel real good. In the last 16 months, weve done some great things, Padrta says. During that time, the company has paid back about $2.5 million owed to U.S. Bank, one of its largest creditors, has caught up on all of its undisputed back taxes, and has expanded its operating fleet to 53 trucks from a low of 23 trucks, he claims.
Were back, and were alive, and were well, he says. Were putting a lot of bucks out in this community again. I would see no reason why it (the reorganization plan) wouldnt be approved. I know all of my people are sure positive.
Padrta says the last year and a half has been a dark tunnel, and he speculates that returning WTB to full health will take several more years. Assuming the reorganization plan is approved, though, he says he expects the company to be back up to about 100 trucks within the next two years and to top out at around 150 trucks within the next five years. He says he doesnt want the company to get any larger than that.
Paying off some of the huge debt owed to U.S. Bank was crucial to the reorganization effort, Padrta says. Paying back taxes also was paramount, considering that the Internal Revenue Service filed a motion late last year to have WTBs Chapter 11 filing dismissed or converted involuntarily to a Chapter 7 liquidation. The U.S. Attorneys office here, on behalf of the IRS, since then has asked the Bankruptcy Court to dismiss that motion.
Another possible sticking point is an apparently depleted, 10-year-old WTB employee stock ownership plan, considering that there are strict federal laws pertaining to stewardship of state retirement programs. The reorganization plan appears to provide no provisions for reimbursement to ESOP shareholders, at least until all unsecured creditors allowed claims have been paid in full. However, Padrta says the company is working on a plan that might enable it to reimburse ESOP shareholders fully.
Overall, the reorganization plan proposes to pay four different classes of WTB creditors on a pro rata basis until all claims are paid in full. The company contends in the plan that its unsecured creditors, who are owed a total of more than $3.6 million, would stand to get back less than half of what they are owed if the company is forced to liquidate.
The reorganization plan calls for Padrta to continue to manage the company, and says no other shareholders, officers, or directors are contemplated. However, it says the draws, compensation, and raises paid to him will be limited.
The plan also says the company intends to pursue to conclusion a lawsuit it filed in October 1996 against Rob Wolf, its former vice president and general manager. WTB blames most of its financial woes on Wolf, who managed the company from February 1992 to August 1996, when he was fired. It alleges, among other things, that he improperly loaned, or caused to be loaned, varying amounts totaling more than $2.4 million to about 335 truck drivers. That caused cash-flow problems, the company says, forcing it to file for Chapter 11 protection after U.S. Bank refused to extend additional credit and called its loans due.
Wolf denied the allegations and filed a lawsuit against Padrta and WTB. He claimed that Padrta misused WTB funds, credit, and employees for his own personal gain and to bolster other business ventures he owned. He contended that Padrta had interfered with his management of WTB, unilaterally ordering numerous trucks and other equipment that the company couldnt afford, and drained its cash flow by forcing it to pay bills incurred by now-defunct leasing and construction businesses that he owned. He further alleged that Padrta suffered from a manic-depressive, or bipolar, disorder that had made him act irrationally and rendered him incapable of managing the company.
At the time of its bankruptcy filing, WTB, a 24-year-old company that once was known as Western Truck Brokers Inc., primarily was contracting with independent flatbed truck owner-operators to haul its customers cargo across the 48 contiguous states and throughout much of Canada. As a truck broker, the company arranges shipments of machinery, building materials, steel, aluminum, and other general commodities. Although it relied mostly on independent owner-operators, it also owned and operated some trucks.
Bankruptcy Court documents say the company had gross revenues of $22.9 million in 1994, $25.4 million in 1995, $26.2 million in 1996, and $4.8 million in early 1997 before filing for Chapter 11 protection.
WTB now is operating under the authority of American Transport Inc., a large Pittsburgh, Pa.-based company that is providing WTBs insurance, licensing, bonding, fuel, and other direct operating expenses in return for a 14 percent cut of the companys gross revenues, Padrta says. He says the arrangement is working well, and that ATI is providing WTB with crucial financial support.