Simon Transportation files bankruptcy, contemplates asset sale
Feb 25, 2002 12:00 PM, Gary MacklinAs of 1 pm est, Simon Transportation Services of Salt Lake City UT filed for Chapter 11 bankruptcy protection. The filing in US Bankruptcy Court for the District of Utah, Central Division, in Salt Lake City, includes Dick Simon Trucking, the primary subsidiary. Court papers say that Simon intends to reorganize through an asset sale on an expedited basis. The asset sale comes about as a result of Simon’s liquidity crunch and a lack of debtor-in-possession financing for a full reorganization. The company will continue to operate as it seeks bids.
Simon officials say that poor revenue, high insurance costs, and an unstable market in new and used equipment have created significant losses. The company experienced negative cash flow and failed to renegotiate debt and lease obligations. Simon simply lacked the liquidity to continue operation outside bankruptcy protection with essentially all its assets already pledged as collateral.
One immediate result of the filing will be a reduction of the tractor and trailer fleet by up to 40%. The reduction will take several weeks as Simon matches its available equipment to the most desirable accounts and traffic lanes. When complete, the reduction plan will leave Dick Simon Trucking with roughly 1,500 tractors and 2,200 trailers. Employee head count will fall in line with equipment reduction. Employee wages along with health and welfare benefits will be paid as usual. Retirement accounts are maintained by a bank independent of the company and are not affected by the court filing.
Jon Issacson, chief executive officer says that Dick Simon Trucking should emerge from bankruptcy intact with a much leaner operation.