By D.R. STEWART World Staff Writer on Dec 13, 2011, at 2:14 AM Updated on 12/13/11 at 9:27 AM
In the mail
Bankruptcy trustee Patrick Malloy: "The distribution will effectively pay wage claims in full. It will take a few days to process 640 checks."
Former employees of bankrupt Arrow Trucking Co. who were owed back wages and benefits when the Tulsa-based hauler ceased operations two years ago are receiving checks this week totaling $2.05 million, bankruptcy court officials said Monday.
Arrow bankruptcy trustee Patrick J. Malloy III said 640 former Arrow employees who filed wage and employment law violation claims against the bankruptcy estate should receive checks in the mail within days.
The checks range in value from $206.32 to $10,950, court documents show. The average distribution to former Arrow employees is $3,203.68, records say.
Malloy said the latest distribution is possible because the bankruptcy trustee and a Utah bank reached a settlement last month under which the bank paid the bankruptcy estate $850,000 to dismiss all claims against each other.
The agreement between Malloy and Transportation Alliance Bank of Ogden, Utah, Arrow's former lender, was approved last week by U.S. Bankruptcy Judge Dana L. Rasure in Tulsa.
"We are very happy to have TAB pay us, the court approved the distribution and we are writing checks," Malloy said. "The distribution will effectively pay wage claims in full. It will take a few days to process 640 checks. There is no (computer) program. They all have to be written, and I have to sign every one of them."
The second distribution of Arrow assets to former employees follows by a year the initial distribution of $1.97 million to 564 former employees.
Malloy said he had hoped to make the second distribution early this year but had to delay it because employees kept filing wage and benefit claims throughout 2011.
The employee claims stem from the abrupt closing of the 61-year-old flatbed carrier on Dec. 22, 2009.
On that day, Arrow executives locked employees out of corporate offices at 4230 S. Elwood Ave. and abandoned hundreds of drivers and their loads around the country without fuel or money to return home.
Arrow executives filed a Chapter 7 bankruptcy liquidation petition on Jan. 8, 2010.
After reconstructing Arrow's financial records, Malloy estimated the company's assets at $8.55 million and liabilities at $98.97 million.
The employee claims against the bankruptcy estate include back wages and claims arising from Arrow's violation of the federal WARN Act.
The Workers Adjustment and Retraining Notification Act requires companies employing more than 100 people to give each employee at least 60 days' written notice of a facility's closing and the termination of their employment. Failure to provide the notice can make employers liable for 60 days of wages per employee, the law says.
Malloy said the latest distribution to employees will mark the third straight eventful December for them.
"They all got stranded in December (2009)," Malloy said. "They got their first check in December 2010 and their second check in December 2011."
On Jan. 8, 2010, the same day Arrow filed its bankruptcy petition, the Utah bank filed a lawsuit against Arrow and its top executives in U.S. District Court in Tulsa.
TAB's lawsuit alleged the company submitted to TAB false invoices that defrauded the bank of at least $15.1 million, court documents show.
TAB alleged that all assets and avoidance claims to which Malloy claimed legal title under bankruptcy laws "were, in fact, acquired and maintained with proceeds of, or resulting acquisitions from, the money stolen from TAB such that all assets of the bankruptcy estate are, in equity, assets of TAB prepetition and not assets of the bankruptcy estate."
In Malloy's lawsuit against TAB, the trustee alleged the bank improved its financial condition during the 90 days before Arrow's bankruptcy filing while it continued lending money to the carrier - to the detriment of other creditors.
The trustee's lawsuit sought to reclaim arbitrary transfers of money from Arrow to TAB in the 90 days before the company filed bankruptcy.
In his motion requesting court approval of the settlement, Malloy said continuing litigation between the parties would entail "thousands of dollars" in accounting expenses, a lengthy trial and appeals.
"The settlement avoids years of litigation and appeals," Malloy said in his motion. "Given the fact there are substantial legal questions involved in this dispute, there will certainly be appeals ... by one or both of the parties depending on the rulings. These appeals will effectively delay any ability of the trustee to effect additional distributions of money to priority wage claimants for years to come.
"The settlement funds which are to be paid in connection with this settlement coupled with TAB's release of its constructive lien claim will permit the trustee to effect a second distribution to priority wage claimants. This distribution will be sufficient to pay 100 percent of the priority wage claims."
Rasure approved the settlement agreement Dec. 6. The judge approved the distribution to former employees on Thursday.
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
Original Print Headline: Arrow back pay going out
