American Movers Blaming disruption from the West Coast shipping stoppage, household moving and storage company American Movers Inc. has filed for bankruptcy court protection from its creditors.
files Chapter 11
The 30-year-old company says
disruption from the dock lockout
drove up overtime and costsBy Russ Lynch
rlynch@starbulletin.comThe 30-year-old company said the West Coast snarl was an added blow to an already tight financial situation.
"What I've tried to do is just do the prudent thing and file in Chapter 11 and reorganize in such a way as to pay off the creditors," said Arthur A. Heath, the company's president and director.
The company made a mistake in submitting the winning bid for a military contract three years ago, ending up in a high-cost situation where it couldn't get workers' compensation for its employees and had to lease workers from Altres Staffing Inc., he said.
That drove up costs. The added expenses and cash flow crunch of the West Coast waterfront shutdown pushed the company over the edge, Heath said.
The company said that when there is an even flow of goods, manpower needs are predictable and can be kept to a minimum. Disruptions on the West Coast meant sudden spurts of movement, requiring more labor, some overtime and higher expenses, company officials said.
Chapter 11 bankruptcy allows a business to keep operating while it reorganizes, but suspends payments to creditors during the restructuring, Heath said.
The restructuring will allow the company to concentrate on its best businesses, household goods moving and storage, and get rid of those that are poor or, as in the case of the military contract, "impossible," Heath said.
The military contract has two months to go and getting out early might incur a penalty but it will be worth it in the long run, he said.
Meanwhile, the moving business is shifting into its traditional slow season, giving American Movers some breathing space, he said.
In the summer peak, the company uses some 90 "co-employees" brought in through the Altres contract, plus as many as 40 temporary workers, he said.
Jerrold K. Guben, the attorney handling the bankruptcy for American Movers, said there is hardly any debt, compared to some bankruptcy filings.
American Movers has one secured creditor, City Bank, which is owed about $400,000.
"We are current on all our obligations to City Bank," Guben said.
The bankruptcy document filed Tuesday shows about $645,000 in debt to the top 20 unsecured creditors, ranging from $140,000 owed to a paper company in Oakland, Calif., and $104,000 to Altres Staffing Inc. in Honolulu down to less than $20,000 to each of several small creditors.
Guben said the federal bankruptcy court yesterday authorized American Movers to complete ongoing contracts.