A start-up trucking company that raised at least $3 million this year by selling stock directly to unionized longshoremen now claims it is insolvent, with less than $1 million in assets remaining and debts that total as much as $1 million.
Irvine-based Allied Port Transporters Inc. filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Santa Ana. The filing triggered an automatic halt to all collection activity being pursued by creditors. However, the court dismissed the case on Nov. 22 after the company failed to file required documents, including a reorganization plan. With the dismissal, the stay is lifted and creditors are free to continue trying to collect.
"We're greatly disappointed," said Stu Zelden, treasurer for Harris Stationers Inc., which is owed more than $8,000 for office furniture and supplies. "They kept promising and promising they'd send a check but it never came."
One option for creditors is to try to force a liquidation of the company under Chapter 7 of the Bankruptcy Code. Zelden said his company has opted to file two claims against Allied Transporters in Small Claims Court. The cases are scheduled for early January.
In its filing, Allied Port Transporters listed both assets and debts in the range of $500,000 to $1 million. Unsecured debts included more than $400,000 owed to suppliers, lawyers and service providers, who were listed as its largest unsecured creditors.
"It's a very unfortunate situation," said Jeff Winikow, a Century City attorney specializing in employee rights. "It just drives home the point that pension money should not be invested in overly risky start-up ventures."
The deal was marketed directly to unionized dockworkers at the ports of Los Angeles and Long Beach via informational meetings at the Ports 'O Call Village. A total of $12 million in start-up funds were sought from outside investors. Yet company officials would still have owned 80 percent of the stock, far higher than they would normally receive given that they contributed few hard assets.
Longshoremen were encouraged to invest using retirement funds by discounting the shares to offset the 10 percent early withdrawal penalty from 401 (k) accounts.
Back in March, Allied Port Transporter board member David Thomas, who took a lead in promoting the offering, called Allied's business plan "a slam dunk winner" in a Business Journal story.
Last week, repeated calls to Thomas, president of Irvine-based All American Capital Corp., were not returned.
Calls to Chief Operating Officer Rudy Aguirre and board member John Trutanich, who filed the bankruptcy petition, also were not returned.
As of mid-March, officials said they had already raised $3 million. Newport Beach attorney Roger Schnapp, who served as company lawyer from March through October, said they kept seeking out fresh investments to keep the firm afloat, obtaining about $500,000 through a stock sale in late August or early September.
"They were constantly out there raising money while I represented them," said Schnapp, who stopped representing Allied in October after unpaid bills to him totaled nearly $20,000, according to the court filing. "A week prior to the bankruptcy filing, I was assured I would be paid. But they've had cash flow problems for a while almost since they began."
Allied originally planned to purchase 200 mostly used trucks from independent-owner operators by the time the operation launched in April. By early March, company officials said they had obtained just 27. (Last week, Allied's Web site said it was only looking for drivers who owned their own vehicles.)
Allied had projected revenues of $36.7 million in its first year of operation, despite starting with no customers.
It was unknown last week how successful the firm was in attracting customers. But it racked up $22,242 in per diem fees for failing to return empty containers to China Shipping Container Lines terminals within five days of hauling away the loaded boxes, according to Debbie Young, China Shipping's equipment control coordinator. The vessel line has since barred truckers working for Allied from moving any more cargo.
"Wouldn't you be upset?" Young said. "They kept containers out longer than they were supposed to. The truckers should be shut out by now. They are not allowed to pick up anything else, I'm sure."
Also left in the lurch are creditors, including the State Compensation Insurance Fund, which is owed $99,568 in workers compensation premium payments. Jim Zelinski, a spokesman for the State Fund, declined comment.
Other unsecured creditors include Pasadena-based Penske Truck Leasing Co. LP, which is owed $65,226.79, and Long Beach-based Clavito's Truck Tire, which is owed $4,014.09.
Schnapp said one problem was that Aguirre became "very ill" and was hospitalized for weeks, although he has since returned to work. "The most skillful (person) at running the day-to-day operation was Rudy Aguirre," said Schnapp. "I can see how that (illness) could have been the death blow."
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