Mid-States Ceases Operations

This story appears in the April 6 print edition of Transport Topics.

Four more trucking companies, including Chicago-area less-than-truckload carrier Mid-States Express Inc., have filed for Chapter 11 bankruptcy protection, becoming the latest casualties of the continuing economic downturn and credit crunch.

Fifty-two-year-old Mid-States, which operated in 13 Midwest states until a service cutback in mid-March, had 521 workers and revenue of approximately $70 million last year, said Steve Hartmann, vice president of sales and marketing.

In addition, Price Trucking Inc. of Aberdeen, Md., and F.T. Silfies Inc. of Allentown, Pa., which haul cement and limestone, made a March 25 Chapter 11 filing, stating they will continue operations during reorganization.

In Texas, Gulf Coast Transport Inc., primarily a truckload operator, made its filing on March 31.

The failures are the latest in a wave of bankruptcies among carriers, which topped 3,000 last year and led to a reduction of about 7% in trucking capacity.

Other recent bankruptcies in-clude truckload operator Summitt Logistics & Brokerage of Clarksville, Ind., whose sales were listed at nearly $90 million.

“Mid-States was like all carriers in our current economic conditions,” said Hartmann, whose company is based in the Chicago suburb of Aurora, Ill., and hauled general commodities, including retail and industrial goods. “It was in somewhat of a challenged financial situation. However, it was being worked through.”

“We were a viable business,” Hartmann said. “We were working with a plan with our lending institution, and our lending institution simply quit funding. We couldn’t resolve things; we just ran out of funding.”

The Mid-States bankruptcy case was assigned to Judge Bruce Black in the Northern District of Illinois.

Hartmann said Mid-States’ relationship with lenders was hurt by its $2.8 million payment to the U.S. government’s Pension Benefit Guaranty Corp. in December. The mandatory payment was made in connection with an underfunded company defined benefit pension plan that the company “froze,” or chose not to fund.

Hartmann said the PBGC placed a lien on company assets while the dispute was resolved. He said Mid-States’ pension liability arose because the company continued to offer a defined benefit pension plan that is subject to government oversight instead of switching to a 401(k) plan, which is not regulated by the PBGC.

“We had to borrow $2.8 million to make the payment,” Hartmann said. “That wasn’t the final straw, but it didn’t sit well with our lenders.”

Hartmann wouldn’t say what the company’s intentions are with regard to future operations, though he said there were lender liability issues such as payment practices that had to be addressed. He declined to give details or name the lender.

Amcore Bank, N.A., a financial institution based in Rockford, Ill., filed five appearances with the court indicating the interest of the firm and its attorneys to participate in the case.

Bank spokeswoman Katherine Taylor would not comment on the reasons why the bank filed to be part of the case or confirm that it is the primary lender to Mid-States.

Hartmann said after the lenders told the company that they would not provide more funding, the company notified its terminals that freight in the system should be delivered, but that no morepickups should be made. Deliveries were completed last week. Its fleet included more than 500 tractors and more than 1,000 trailers.

The bankruptcy filing followed by two weeks a notice on Mid-States’ Web site that it would stop service in North Dakota, South Dakota, Nebraska and Kansas. Service also was ended in portions of Minnesota and Missouri.

Full-state coverage was continued in Indiana, Illinois, Iowa, Kentucky, Ohio, Michigan and Wisconsin.

Meanwhile, President Jim Niness of Silfies/Price said, “Historical losses resulting from an overly aggressive growth strategy, a declining economic environment and unprecedented volatility in fuel prices has left the company with a substantial debt load.

“We intend to emerge from Chapter 11 with a stronger balance sheet and highly focused operations, so that F.T. Silfies/Price Trucking can not only survive these difficult times but also grow and prosper in the years ahead.”

Gulf Coast, based in Sunnyvale, Texas, said in its filing that fuel-price spikes and an unprofitable contract with a major shipper were major factors in its bankruptcy.

Gulf Coast, with a fleet of 350 tractors and 700 trailers, provides warehousing and brokerage services, according to its Web site. Its annual revenue is about $65 million, according to a filing in U.S. Bankruptcy Court in the Northern District of Texas, Dallas division.

The company filing also said business decisions made by a former vice president of operations, who has been fired, was another reason for the bankruptcy.