Court awaits O&S Trucking's reorg plan

Nearly one year after O&S Trucking Inc. President Jim O’Neal stepped down as Springfield mayor, O’Neal is mum on his company’s cooperative business agreement with Prime Inc. that allows the over-the-road transporter to serve customers during its ongoing Chapter 11 reorganization.

Case status
As of May 7, the federal bankruptcy court was awaiting O&S Trucking’s formal reorganization plan to the Western District of Missouri’s online document filing system. O&S has three times successfully extended a 120-day exclusivity period for the rights to submit its own plan of reorganization. Most recently, on April 16, the judge approved an extension through Aug. 30.

In all, the parties have filed more than 500 motions in the case.

“There are still several creditors scrapping with O&S for relief from the stay, so they can take their trailers back and that type of thing,” said David Wieland, a 30-year Springfield bankruptcy attorney who performed a cursory review of the case for Springfield Business Journal.

Wieland of Wieland & Condry LLC said it appears the bankruptcy proceedings are nowhere near their conclusion.

“It’s just a big company,” he said. “There are lots of issues flying around there that aren’t going to get settled in 120 days. It’s an unusual bankruptcy, even for a Chapter 11, because this is a big one.”

Wieland said if no reorganization plan is submitted and confirmed by creditors and the judge before the end of August, creditors could submit their own plans, which Wieland said typically call for a liquidation of the debtor’s company.

Neither O’Neal nor his Kansas City attorney Jonathan Margolies responded to multiple requests for comment on this story.

Prime time
Meanwhile, the affiliation with Prime, approved by U.S. bankruptcy Judge Arthur Federman on Aug. 6, 2012, allows O&S Trucking to keep 80 percent of freight revenues; use Prime’s buying power for fuel; utilize Prime’s fleet; and access Prime’s administrative and marketing resources to reduce overhead, according to court records.

In court filings, O’Neal testified that the business relationship is critical to O&S Trucking’s profitability and emergence through bankruptcy reorganization. In Federman’s decision, the judge wrote: “The liquidity needs of (O&S) were pressing and debtor could not generate the 80 percent revenue stream contemplated by the Prime agreements until court approval was obtained. Pursuant to bankruptcy rule 6003, debtor demonstrated that irreparable harm would occur if the Prime business affiliation was not implemented promptly.”

Prime Inc. President Robert Low and general counsel Steve Crawford also did not respond to multiple requests for comment.

Wieland said details of the Prime relationship would have been in place prior to the Chapter 11 filing. The original agreement was inked May 25, just eight days after O&S board members voted to seek bankruptcy reorganization.

“They apparently had this deal worked out beforehand,” Wieland said. “They certainly had to anticipate the bankruptcy filing.”

Wieland said it was not uncommon for companies to go through lengthy Chapter 11 reorganizations, noting cases could take two years or more to conclude.

For instance, on a large scale, American Airlines filed for Chapter 11 bankruptcy protection in November 2011 and submitted its reorganization plan to the courts this month. Local bankruptcy reorganizations of note include Gage’s Long Creek Marina Inc., Jaspers Enterprises and G2 Material Handling Inc./Southwest Stainless Inc., each of which had a reorganization plan in place less than a year after filing for bankruptcy protection.

Objection overruled
One creditor in the O&S case, Caterpillar Financial Services Corp., originally objected to the Prime agreement saying it effectively served as an acquisition.

Caterpillar Financial withdrew its objection at a final hearing July 18, as did Daimler Truck Financial, according to court records.

During the hearing, however, Metropolitan National Bank entered an oral objection to the commission O’Neal would receive as part of the agreement. O’Neal testified that he was foregoing his regular salary through the remainder of 2012 and would only be paid if he secured new freight customers.

The court overturned Metropolitan National Bank’s objections and approved the agreement Aug. 6.

Representatives of Caterpillar Financial and Daimler Truck did not respond to requests for comment by press time.

Metropolitan National Bank Senior Vice President of Business Development and Marketing Officer Michal Moss Early declined an interview on behalf of the bank citing company policy and banking regulations.

Debts owed
According to the filing, O&S Trucking owes 200 to 999 creditors, including unsecured claims by Kansas City-based Springfield Freightliner Sales, $220,000 for a maintenance contract; Chicago-based Bridgestone/Firestone, $211,211 in trade debt; Kansas City-based Dollar Burns & Becker LC, $200,000 for a wrongful death settlement; and Brentwood, Tenn.-based Comdata Corp., $196,302 for a Mastercard fuel purchase contract. The filing shows O&S holds assets of $50,000 or less against estimated liabilities of $10 million to $50 million.

Caterpillar Financial is owed roughly $4 million on 63 trailers it financed for O&S, and Daimler Truck is in default on $290,000 related to the purchase or lease of 110 trucks, according to court filings and SBJ archives.

Creditor Metropolitan National Bank is not listed among 20 unsecured creditors in the original Chapter 11 filing.

At the end of the May 7, 2012, Springfield City Council meeting, O’Neal resigned his post as mayor, citing business and personal matters.

In an interview with SBJ about a week later, O’Neal said his business had been struggling, generating roughly $40 million in 2011 revenues – some $20 million less than 2008, the year before O’Neal was elected.

On May 17, the O&S board voted to seek Chapter 11 reorganization.

Wieland said the next step for O&S is submitting its reorganization plan and gaining the judge’s approval.

“Then, they pay out the creditors to the extent they can pay out the creditors,” Wieland said, cautioning that not all reorganization plans are approved. “Many Chapter 11s don’t work, and they are converted to a Chapter 7 liquidation.”