Case closes on Prime buyout of Oklahoma carrier

“A compromise was reached between the parties where Prime paid the estate about $454,000 and in return got the release of about $200,000 in escrow money,” said Nick Franke, attorney with Spencer Fane Britt & Browne, the firm handling the Rocin Liquidation Trust for disbursing the company’s property.

Rocor filed for Chap. 11 bankruptcy Aug. 5, 2002, and the company’s assets were put up for sale Oct. 8, 2002, Franke said.

The company “tried to downsize their fleet to be more efficient and in doing so they weren’t able to reduce their debt from trucks and trailers as quickly as they reduced their size,” Franke said.

Prime was the high bidder in the purchase of Rocor’s assets, and the sale closed Oct. 17, 2002, Franke said. What Prime bought was valued at about $17.5 million, and included about 800 tractors, 1,100 trailers, a terminal in Oklahoma City and accounts receivable.

All of that, however, was not debt-free, said Steve Crawford, general counsel for Prime. “Many of those were leased pieces of equipment that Prime did not assume the leases on and ended up returning to the lessor. It’s not like we walked out of there with all that equipment,” Crawford said.

According to the Asset Purchase Agreement, Prime bought everything except the real estate: two parcels in Georgia, and one in Oklahoma City, Franke said, adding that Prime was also leasing a Rocor terminal in Oklahoma City.

This kind of purchase is analogous to buying a house full of furniture sight unseen, Crawford said. Some of it is not usable, while some of it is good and serves as a nice complement to the business.

Red flags went up after the sale regarding some of the assets Prime had purchased. “By the end of the year 2002, there became an issue as to whether or not Prime was going to be able to collect the accounts receivable they purchased,” said Prime’s attorney, Raymond Plaster, of the law firm of Moon Plaster & Sweere.

A majority (of the accounts receivable) were collected in the normal course of business, but there was a core group of about $800,000 that posed a problem on collection,” said Eric Nau, Prime general counsel.

At the end of 2002, Prime still owed about $400,000 in cash, plus rental fees from the Rocor terminal it was leasing, Franke said.

“(Rocor’s) sole claim was for $400,000, and our claim was for about $800,000,” said Nau.

“That resulted in a motion filed by Prime in March 2003 claiming a breech in the Asset Purchase Agreement by Rocor,” Plaster said.

“We alleged in our motion that we were entitled to knock off the purchase price of the accounts receivable that Rocor represented were good receivables,” Plaster said. “Prime filed a motion with the bankruptcy court that we were entitled to an administrative expense against the bankruptcy estate for the breech of the agreement to the tune of around $800,000.”

New division

In the end, the Rocor purchase increased Prime’s market share relative to hauling refrigerated goods. The company has integrated Rocor’s refrigerated freight routes and drivers into a separate division called RTC, Crawford said.

About 240 drivers and their trucks came over to Prime, said Nau. Prime now operates a satellite office out of Oklahoma City with between 10 and 20 employees, he added.