Court: O&S Trucking CEO seeks salary amendment

Though a formal reorganization plan has yet to be submitted in O&S Trucking Inc.’s Chapter 11 bankruptcy case after 16 months, CEO Jim O’Neal has filed an amended plan of compensation.

O’Neal, the former Springfield mayor, is seeking an annual salary of at least $300,000 for the next five years from affiliated trucking company Prime Inc., according to U.S. Bankruptcy Court documents filed last month in the Western District of Missouri. On Sept. 19, O’Neal asked for annual salary increases of 3 percent from 2015–18, beginning with a base pay of $300,000 next year.

“The compensation suggested in the employment contract is, we think, very consistent with industry standards for a business of this size,” said Polsinelli PC attorney Thomas O’Neal, who serves as personal representative of the O&S CEO in the case. “This employment contract is just part of an overall arrangement that is continuing to be evaluated as part of the plan’s confirmation process. It’s entirely possible that when the plan is filed, it will have changed.”

Jim O’Neal and the company’s Kansas City-based bankruptcy attorney, Jonathan Margolies of McDowell, Rice, Smith & Buchanan, did not return requests for comment by press time.

O’Neal is currently only being paid roughly 2 percent commissions for revenue generated by O&S for hauling freight, plus expenses.

A ruling on the compensation is not expected until after the formal bankruptcy reorganization plan is submitted, according to court records. The reorganization plan is due by Nov. 30.

The compensation request comes on the heels of reported losses by O&S during the first half of the year. According to balance sheets submitted to the court, O&S has recorded a combined net loss of $526,000 between Jan. 1 and June 30.

Bankruptcy background
On May 30, 2012, O’Neal filed for Chapter 11 reorganization for the company he co-founded in 1981. Court documents show the company had estimated assets of $50,000 or less against estimated liabilities of $10 million to $50 million.

According to the filing, O&S Trucking owes 200 to 999 creditors, including a handful of unsecured claims around $200,000 apiece for a maintenance contract with Kansas City-based Springfield Freightliner Sales; trade debt with Chicago-based Bridgestone/Firestone; a wrongful death settlement with Kansas City-based Dollar Burns & Becker LC; and a Mastercard fuel purchase contract with Brentwood, Tenn.-based Comdata Corp. In addition, Caterpillar Financial Services Corp. is owed roughly $4 million on 63 trailers it financed for O&S, and Daimler Truck has claimed default on $290,000 related to the purchase or lease of 110 trucks, court records show.

Tim Becker, a principal with Dollar Burns & Becker LC, said its claim revolves around his client, Tara Coffman, whose husband was killed in an accident caused by an O&S driver. Becker said O’Neal personally guaranteed payment to the family, which prompted a lawsuit filed in Greene County in December to secure the judgment from O’Neal. A ruling in that case had not been made as of Oct. 10.

“We are owed $200,000 still from O&S, and a big part of that money goes to two children who lost their father,” Becker said. “We’ve had discussions with them where they have offered less than that amount. We’ve told them we can’t do that because we’re talking about minors, and they are owed that money.”

On Oct. 9, one unsecured creditor, Springfield-based SM Trailer Leasing LLC, was the subject of a ruling in the Chapter 11 case after it demanded details of O’Neal’s current compensation arrangement. U.S. bankruptcy Judge Arthur Federman said O&S had one week to provide SM Trailer a list of all expense reimbursements O’Neal has received since the case began. SM Trailer organizer Stephen Monnig could not be reached for comment by press time. The company has a claim of more than $93,000 against O&S.  

Pay restructured
On Aug. 6, 2012, Federman approved a formal affiliation between O&S and Springfield-based haulers Prime Inc. that O’Neal said at the time was critical to the company’s profitability and emergence through bankruptcy reorganization. The approved agreement allows O&S to keep 80 percent of freight revenues; use Prime’s buying power for fuel; utilize Prime’s truck fleet; and access Prime’s administrative and marketing resources to reduce overhead.

In the deal, O’Neal was scheduled to receive 3 percent commission for revenue generated by O&S for hauling freight in the first year, 2 percent in the second year and 1 percent in the third year.

Polsinelli’s O’Neal said compensation for his client during the last 16 months has been limited by the commission arrangement currently in place. He added that the reorganization plan should include a pay structure for key executives.

“[Prime owner] Robert Low testified that this was an arrangement that Prime has made successfully with other trucking companies, and it was Prime’s proposal, in all of these instances, that they wanted to also pay a commission to the owner of the trucking company,” said O’Neal, the managing partner for Polsinelli’s Springfield office. “And it was Prime’s insistence that to do the overall agreement with O&S, it paid commissions to Mr. O’Neal. This was without regard to what Prime was paying O&S. The bankruptcy court approved that. And as part of that approval, and with Mr. O’Neal’s agreement, he took basically no salary from O&S, and has had no salary other than covering minimal expenses such as health insurance.”

O’Neal said he expects O&S would have a formal reorganization plan submitted by the end of November. At least four extensions on submitting the plan to court have been granted by the judge.

“This has been an extremely difficult Chapter 11 bankruptcy because of the number of creditors involved,” he said.