An Orange County FedEx contractor has filed for bankruptcy protection for the second time in seven months to find a way to get its fleet back to work.
CBS Trucking Inc., of Newburgh, declared $301,000 in assets and nearly $1.3 million in liabilities, in a Chapter 11 petition filed Feb. 7 in U.S. Bankruptcy Court, Poughkeepsie.
CBS owner Sokol Bala, of Southbury, Connecticut, said bankruptcy will allow the company “to successfully reorganize its debts and emerge as a profitable residential package delivery service.”
CBS lost one of its FedEx contracts in 2021, according to Bala. The resulting decrease in revenues led to a default on a $1,163,000 loan issued in 2020 and backed by the U.S. Small Business Administration.
Bala did not explain why CBS lost the FedEx contract.
The company employs 14 people and maintains a fleet of 17 trucks at FedEx’s depot next to New York Stewart International Airport. It booked income of nearly $1.3 million last year and nearly $1.9 million in 2022, and paid Bala a $65,000 annual salary.
The primary debt is owed to ReadyCap Lending, a Berkeley Heights, New Jersey lender that sued CBS for defaulting on the SBA loan and then defaulting on a revised deal.
CBS initially filed for Chapter 11 bankruptcy protection in June 2023.
U.S. regional trustee William K. Harrington asked the court to dismiss the case and not allow it to be converted to Chapter 7 liquidation.
CBS had violated a court order by failing to make payments to ReadyCap and had failed to file two monthly operating reports, Harrington noted, and the secured debt “far outweighs the value of the collateral (the trucks) that secures it.”
“Dismissal is in the best interests of creditors,” Harrington’s memorandum of law states, so that creditors “may properly seek their remedies against the debtor in other forums.”
CBS’s attorney, James J. Ruffo, responded that the company anticipated becoming current on payments in a couple of weeks, was in the process of completing the monthly operating reports, and was discussing financing with potential lenders.
The reorganization plan that will be proposed, he stated, “will pay creditors more than they would receive in a Chapter 7 bankruptcy.”
On Oct. 23, U.S. Bankruptcy Judge Cecelia G. Morris granted the trustee’s motion and dismissed the initial bankruptcy case.
