Officials of Preston Trucking Co. Inc., the Eastern Shore-based company that unexpectedly ceased operations in July, provided answers for some of its nearly 10,000 creditors yesterday on the company's recent Chapter 11 bankruptcy filing.
During a financial fact-finding hearing at the Office of the U.S. Trustee on Pratt Street, David Letke, Preston's president and chief executive, said company officials realized during the week of July 26 that they had no option but to file for bankruptcy when they determined that the company did not have enough cash to cover its $6 million payroll.
Preston's primary lender refused to advance the company cash unless it filed for bankruptcy, he said. "We were going to bounce checks everywhere," Letke said.
The company's principals -- Letke; Sean Callahan, chief financial officer; and Nick Marino, chief operating officer -- bought Preston from Yellow Corp. in July 1998 for an undisclosed sum. Yellow had bought Preston in 1993 for $23.9 million.
That year, Preston had about $450 million in revenue.
The company said it has about $156 million in assets, including vehicles, real estate and inventory, and about $92.5 million in liabilities.
Lawrence A. Katz, an attorney representing Preston, said the company plans to "recover assets and sell them as soon as possible and for as much money as possible.
"After we collect that pot of money, we will then figure out how creditors will be paid," Katz said at the hearing.
Creditors include employees who are due vacation pay, vendors and pension funds.
Based in Preston, in Caroline County, the trucking company was the 21st-largest in the United States, serving about 190,000 customers with operations in 21 states.
The company had about 6,100 employees, 700 of them in Maryland. All were laid off.