MISSOULA – A Missoula-based trucking company with more than 400 employees planned to file for Chapter 11 bankruptcy protection, following similar filings by two subsidiaries.
Jim Palmer Trucking Inc. will file for bankruptcy Friday in Butte, company attorneys said. The filing had not been made by midmorning. Two subsidiaries, Jim Palmer Equipment and Jim Palmer Equipment II, filed Thursday.
Lonnie Wallace, president of Jim Palmer Trucking, estimated the trucking firm and two subsidiaries are delinquent on $1.5 million to $2 million in equipment loans and operating debts.
An emergency filing named banks, equipment lenders and other creditors, including U.S. Bank and G.E. Fleet. More details on the total assets, liabilities, leases, debtors and recent transactions by the companies will be submitted to the court in 15 days, said Andy Patten, the company’s bankruptcy lawyer in Billings.
A leasing company, People’s Capital and Leasing Corp., filed a lawsuit against Jim Palmer and his three companies in late June, seeking payment on a lease for 60 refrigerated transport trailers, after the company failed to make payments in April and May.
Wallace met with Jim Palmer’s 68 non-driving employees Thursday and sent messages to his drivers about the bankruptcy filings. Six workers were laid off Tuesday.
“Once we get some breathing room and reorganize our debt, I think we can survive without more layoffs,” Wallace said. “I’m confident in the current management team, our people and our plan to bring this company back.”
The economy and soaring diesel fuel prices are to blame, said attorney Dennis Lind, adding there will be a “monumental effort” to save the 44-year-old company and its affiliates.
“We want to continue to do operations generally as we have. We may be more lean, but we’ll make every effort to preserve this company not only for Jim Palmer, but for the employees and this community,” Lind said. “This has been a very difficult time for Jim Palmer. He has a great amount of pride in his business, but fuel prices and the state of the economy have placed him in a financial predicament.”
Wallace said the average monthly fuel costs have gone up $381,000 over last year, a 12 percent increase.
“We had a positive fourth quarter in 2007, and we started losing money when fuel exceeded $3.30 a gallon at the beginning of year,” he said.
Patten said Jim Palmer Trucking will analyze which of its trucks could be replaced with more fuel-efficient vehicles. A possible workout plan could include negotiating the leases on existing trucks and trailers with creditors, repaying existing debt over a longer period of time and with lower interest, or attracting new capital to buy new equipment.
Wallace said the company has cut $1.8 million in expenses over the last 18 months and another $750,000 in cuts are planned over the next year through reductions in the management team, adjustments to the driver’s bonus plans and greater employee contributions to health benefits.