By Clarissa Kell-Holland, staff writer
In the year since the shutdown of Tulsa-based Arrow Trucking Co., bankruptcy trustee Patrick J. Malloy III has been sorting through the company’s financial records to find out what led to the flatbed carrier’s collapse.
Malloy recently filed two lawsuits related to the Arrow Trucking bankruptcy case. The first one is against the two former officers of Arrow Trucking, including Doug Pielsticker and his mother, Carol Pielsticker Bump. The second one has been filed against the trucking company’s former lender, the Transportation Alliance Bank – TAB – based in Ogden, UT.
The first lawsuit alleges that Pielsticker, the company’s former president and CEO, and Bump, the company’s sole director, received fraudulent transfers of at least
$12.8 million in assets for their personal use over a four-year period before the company’s filing for Chapter 7 bankruptcy in January 2010.
According to the lawsuit, Pielsticker received $8.4 million in transfers, and Bump received $4.4 million in transfers “disguised as ‘salary.’ ”
“In their capacity as director and CEO, Carol and Doug owed fiduciary duties to Arrow (Trucking),” the suit states.
“Carol and Doug, in the exercise of reasonable care and business judgment should have known that the transfers specified herein constituted either constructive fraud or were effected with the actual intent to defraud and taken steps to prevent such transfers, and that such transfers constituted the dissipation of Arrow’s assets to the detriment and harm of Arrow and its creditors.”
However, Malloy’s case against Pielsticker hit a snag after the former Arrow executive filed a Chapter 7 personal bankruptcy liquidation petition in U.S. Bankruptcy Court for the Northern District of Texas in mid-February.
Pielsticker, who has since moved from the Tulsa area to Dallas, lists his number of creditors as between one and 49. He lists his assets as between $1 million and $10 million and his liabilities as being between $10 million and $50 million.
According to court documents, he lists his debts as “primarily business debts.”
Also, Pielsticker’s petition includes a certificate of credit counseling, but a “debt repayment plan was not prepared.”
Malloy told Land Line that while his claims against Pielsticker are on hold because of the personal bankruptcy filing, his claims against Bump will move forward.
“Essentially my claims against Doug are stayed,” Malloy said. “I will not be able to continue pursuit of the claims in the bankruptcy court here. I can file a claim in Doug’s bankruptcy and hope there will be monies to pay some portion of the claim.”
Pielsticker’s bankruptcy petition states that “after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors.”
A meeting of creditors in Pielsticker’s bankruptcy case is scheduled for March 14. The deadline to object to debtor’s discharge or to challenge dischargeability of certain debts is May 13, according to court documents.
Lawsuit targets bank, too
A few days before Christmas 2009, hundreds of drivers were stranded across the country when the company’s former lender, Utah-based Transportation Alliance Bank, cut off access to fuel cards the day of the company’s collapse.
Malloy is also pursuing litigation against TAB, alleging that the bank received millions in pre- and post-bankruptcy transfers that actually belongs to the bankruptcy estate.
He has filed an adversary complaint against TAB, stating that the bank continued to loan money to Arrow Trucking after it knew the Tulsa-based company was insolvent.
“TAB, in its business dealings with Arrow, engaged in inequitable conduct with respect to Arrow and its creditors – including but not limited to controlling Arrow to TAB’s benefit and to the detriment of Arrow’s other creditors,” Malloy alleges in his complaint.
Before the collapse of Arrow Trucking, one former employee, who asked to not be named, told Land Line that representatives from TAB had arrived at the company’s headquarters on two separate occasions in the months and weeks leading up to the company’s demise to check up on the company’s financial condition.
The former employee stated that a representative from TAB was there to “go over the company’s billing processes” in early December 2009. She explained to the TAB representative then about a double-billing scheme in place which sent “inflated invoices” to TAB.
A few months earlier, she said a representative had been there to sit in with a company executive to cold-call customers to verify their account balances. The former employee also worked jointly with TAB to finish customer billing. Malloy alleges that some of the TAB money belongs to the bankruptcy estate.
So far, Malloy has distributed nearly $2 million to more than 550 former employees of Arrow Trucking. A second distribution of money to pay wage claims is scheduled to go out in the first quarter of 2011.
Malloy estimates that Arrow Trucking’s assets are $8.55 million and its liabilities are $98.97 million. LL