American Movers Inc. files for bankruptcy
By Frank Cho
Advertiser Staff Writer
American Movers Inc., faced with a severe cash squeeze after shipping companies temporarily shut down West Coast ports in a labor dispute this month, sought Chapter 11 bankruptcy protection Tuesday from creditors.
The filing by one of Hawai'i's largest and oldest moving companies is unlikely to have any immediate effect on employees or the hundreds of customers that have contracts with the company.
But the bankruptcy filing marks a low point for the company and could be one of the first real signs of any long-term economic fallout from the West Coast dock shutdown that has reverberated throughout the national and local economies.
"That was the deciding factor," said Art Heath, American Movers' president. "It's been a great business. But it's been real tough in Hawai'i, and we cannot continue to operate at this level; there is just no way."
Heath said American Movers has trimmed its workforce from 82 employees at the start of this year to 27 and will focus on its more profitable storage and commercial shipping operations in an effort to be able to pay off its creditors.
"That is my objective, to ensure that everyone will come out of this whole," Heath said. "If we can do a good job of reorganizing and changing our business structure, we can pay everyone. That is partly why I didn't wait until we were so far underwater. We are in pretty decent financial shape."
Under Chapter 11 of the federal bankruptcy code, the company will continue to operate while it works out a plan to pay its debts. The company has 30 days to file a detailed schedule of its assets and debts. No assets or liabilities were detailed in its filing this week.
"We are really the casualty of the dock shutdown," said Jerrold Guben, attorney for American Movers. "It simply interrupted a lot of our cash flow; that put the stake in our heart."
The Pacific Maritime Association, the employers group representing shipping lines and terminal operators, locked out the International Longshore and Warehouse Union dockworkers Sept. 29 at dozens of West Coast ports, claiming the ILWU was using go-slow tactics to pressure management into a new labor agreement.
The 10-day lockout choked off shipping to Hawai'i, and was estimated to have cost the U.S. economy about $1 billion a day. About 90 percent of imported products enter Hawai'i via ship.
Gareth Sakakida, managing director of the nonprofit Hawaii Transportation Association (HTA), a trade organization of about 380 commercial ground transportation companies, said Hawai'i companies have suffered several economic shocks during the past year that have made staying in business difficult.
"It's a tough industry to begin with. Over the last year, we have had 9/11, big increases in workers compensation rates and now the dock shutdown. If you were in a situation where there already was a delicate balance then I can see this pushing you over the edge," said Sakakida.
Sakakida said he doesn't know if any other companies will follow American Movers into bankruptcy, but it they are, they were probably in financial trouble before the dock shutdown.
Guben said American Movers was up to date on all of its debt payments through Tuesday. "It's just that we saw the drop in cash flow because of the dock shutdown and we decided to file the petition almost as a preventive measure."
The company said the bankruptcy filing is not related to a lawsuit filed earlier this month by the family of a 36-year-old woman who was critically injured when she was struck by a metal object that allegedly fell from one of the company's moving trucks.
The company said it has insurance to cover such claims.
Nevertheless, the filing is likely to affect resolution of the suit.
"We understand that there is a certificate of insurance available regarding this kind of accident," said Wayne Kekina, the attorney representing Kathy Mueller. "But there will likely be some temporary stay in these proceedings and now we will probably have to go and get permission from the bankruptcy judge to continue the case."
According to Tuesday's petition, American Movers has between $1 million and $10 million in assets; it claimed roughly the same amount in debts with City Bank as the company's largest secured creditor.
The company said it also owed its twenty largest unsecured creditors — which include Matson Navigation Co. and CSX Lines — nearly $650,000.
Fleenor Paper Co. of Oakland, Calif. was listed as the company's largest unsecured creditor with a debt of $139,646. Altres Staffing Inc., which supplies workers for American Movers in Honolulu, was the company's second-largest unsecured creditor with a debt of $103,773.
American Movers was founded in 1972 as A&P Shipping to move automobiles and pets between Hawai'i and the Mainland. The company later expanded into the household goods moving and storage business.
Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.
