Tulsa World
D.R. Stewart
July 24, 2010
A federal judge has approved hiring a Kansas City law firm to assist in the investigation of a Utah bank's claims against the bankruptcy estate of Arrow Trucking Co.
In an order issued Friday, Chief Judge Dana L. Rasure of the U.S. Bankruptcy Court for the Northern District of Oklahoma in Tulsa granted the motion by Arrow bankruptcy trustee Patrick J. Malloy III to employ Stueve Siegel Hanson LLP.
Stueve Siegel's Richard M. Paul III and Ashlea Schwarz have agreed to assist Malloy at a rate of $300 per hour, court documents show.
Malloy said Paul has assisted him on other large bankruptcy cases, notably the Great Plains Airlines case.
Great Plains, the Tulsa-based regional carrier, launched in April 2001, five months before 9/11. It filed a Chapter 11 bankruptcy reorganization petition in January 2004 and was liquidated in 2005 after executives were unable to secure financing.
"I have worked with this particular law firm and the results have always been good," Malloy said. "Rick Paul has lots of bankruptcy and litigation expertise, and he's familiar with breach of fiduciary duty claims."
In Malloy's motion for an order to employ Stueve Siegel, the trustee said among the pending in the Arrow bankruptcy case are those involving the extent and value of the claims of Arrow lender Transportation Alliance Bank of Ogden, Utah.
TAB provided fuel credit cards to Arrow drivers, as well as day-to-day financing.
After Arrow's financial problems intensified and the company approached its credit limit of $28 million in the fall of 2009, TAB canceled its fuel credit cards Dec. 21, stranding hundreds of drivers and their freight around the country without fuel or money to return home.
Arrow executives at corporate offices at 4230 S. Elwood Ave. in west Tulsa told employees to go home, and the company discontinued business Dec. 22.
Lawyers for Arrow filed a Chapter 7 bankruptcy liquidation petition in U.S. Bankruptcy Court in Tulsa on Jan. 8.
The same day, TAB filed a lawsuit alleging it was defrauded of $12.5 million by Arrow, former Arrow owner Carol Pielsticker, former CEO Doug Pielsticker and Arrow executives Jonathan Moore and Joseph Mowry. The suit was filed in U.S. District Court for the Northern District of Oklahoma in Tulsa.
"TAB represents one of the largest creditors, and they are asserting a lot of money is owed (them)," Malloy said. "We have to fully investigate the facts and circumstances surrounding their claims."
In Malloy's motion to employ Stueve Siegel, he outlines some of the TAB issues to be investigated.
The issues include the interpretation of TAB's financing agreement with Arrow; the extent of its liens, if any, against property of the estate, and the extent to which all or a portion of its claims should be subordinated or reduced to nonpriority status "as a result of its pre-bankruptcy actions and/or failure to act," Malloy says in his motion.
Among the issues the trustee will examine will be the period of time TAB continued to finance Arrow after the Utah bank detected invoice-billing "irregularities" and "discrepancies" in July and September 2009.
In early September, TAB alleges in its lawsuit, it sent a financing manager to Arrow's office. The manager was told by Moore and Mowry that a billing clerk made errors resulting in over-billing and that the clerk had been fired, the lawsuit says.
A mid-September meeting of the TAB official and Arrow executives included a series of phone calls to Arrow "customers" to verify accounts receivable balances. The customers turned out to be "Arrow Trucking accomplices" who responded falsely to the billing inquiries, TAB says in its lawsuit.
In the final weeks before Arrow's collapse, executives at insolvent Arrow allegedly submitted false invoices to TAB and received $1.18 million in emergency cash infusions to stay in business, according to court documents.
TAB alleges in its lawsuit that executives and officers of Arrow and its affiliate companies committed bank fraud and wire fraud that cost TAB $12.5 million.
Malloy estimates the bankruptcy estate's assets at $8.55 million and liabilities of $98.97 million.
