Ronnie Dowdy Inc. files Chapter 11, says owner-operators will be paid

Rene Tankersley | 4/26/2002

Ronnie Dowdy Inc., a privately controlled trucking company in Batesville, AR, announced April 17, it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company's 81 owner-operators, as well as its 275 employees, are being paid as usual, according to Ronnie Dowdy, president, CEO and founder.

"They never missed a beat," Dowdy told Land Line. Additionally, he says the company has no plans to cut owner-operators and is protecting escrow accounts from being part of the bankruptcy.

The company has filed a number of motions with the bankruptcy court to protect the company's 275 employees, as well as preserve the company's insurance programs, obtain interim financing and retain the legal and professional services for the reorganization. Employee 401k accounts are protected by law and not subject to the bankruptcy filing. During the reorganization, the company's vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization.

Dowdy says his company intends to complete and emerge from the reorganization through continuing efforts to reduce expense levels and improve efficiencies. "I don't like where we're at now," he said. "But we'll come out of this and be around for a long time."

The company's decision to seek reorganization was based on a combination of industry, economic and operation factors. A slowing economy, ongoing downward pressure on rates and freight volumes, a significant drop in used equipment values, and rising insurance and claims costs have resulted in losses and negative cash flows. Although current fuel prices were not a factor in the bankruptcy decision, Dowdy says several months of extremely high fuel prices did add to other factors in his decision.

Ongoing efforts at expense reduction, through the sale of assets, closure of facilities and reductions in manpower levels over the past 18 months, plus shrinking opportunities at refinancing because virtually all assets are already pledged as collateral, have not provided the liquidity to continue operating outside bankruptcy protection.

"We decided that even after significant and successful efforts over several months to reduce expenses, we have been unable to overcome the impact of difficult industry conditions and an economy in recession," said Dowdy. "This is a difficult decision in the life of our company, and we regret the negative effect the filing will have on some of our vendors and other business partners, however, we are convinced that the protection gives us the best opportunity to be successful on a go-forward basis."

Dowdy formed the trucking company in 1983 to haul temperature-controlled freight. The company started with three trucks, and now has more than 300 trucks listed in the company's data filed with the FMCSA.
--by Rene Tankersley