An Illinois-based trucking company has filed for Chapter 11 bankruptcy protection, citing a jury award of $10 million in December after a 2019 fatal truck crash involving one of its drivers.
Joseph Keller, president of Marvin Keller Trucking, headquartered in Sullivan, Illinois, filed the first of several emergency motions in the U.S. Bankruptcy Court for the Central District of Illinois on Friday, stating the bankruptcy filing is necessary to “avoid irreparable and immediate harm” to the carrier’s operations.
In the filing, Keller wrote that the “substantial money judgment” against the trucking company, stemming from the jury verdict is the “main event” for the family-owned trucking company, founded by his father, Marvin Keller in 1965, to file Chapter 11.
“With an agreed forbearance on collection of the judgment about to expire, and the debtor [MKT] unable to pay the judgment amount, the debtor filed a voluntary petition under Chapter 11 to maximize the potential recovery to its creditors and for the benefit of the other parties in interest including its employees,” according to the trucking company’s emergency motion.
A hearing on Marvin Keller’s emergency motions is set for Wednesday.
In a statement to FreightWaves, Keller said the verdict “far exceeds the amount of liability insurance and reserves.”
“The economics of this verdict are clearly lopsided and disproportional,” he said.
Keller said the 57-year-old family-owned trucking company “plans to reorganize, restructure, and re-emerge in solid condition.”
“My dad taught me early on to work hard to earn the respect of your drivers and to plan for the worst,” Keller said. “This event will not defeat us and will only serve to make us stronger. Our associates and their families, vendors, and other stakeholders are loyal and firmly committed to the restructuring.”
What happened?
Marvin Keller Trucking was hit with a nuclear verdict, defined as a jury award of $10 million or more, in December 2021, following a five-day trial involving one of its former drivers, John Walls of Beecher City, Illinois.
According to the Kentucky State Police report, Walls was traveling eastbound on Interstate 64 around 11:31 p.m. on March 13, 2019, when he crossed the grassy median and collided with a pickup truck, driven by Christopher Short, 44, of Mount Sterling, Kentucky, who was headed westbound on Interstate 64 in Bath County. Both vehicles went through a guardrail and down an embankment after Walls’ rig pushed Short’s vehicle, “which became airborne and rotated counterclockwise, through the guardrail and into a tree.”
Short was pronounced dead at the scene, leaving behind his wife, Joy, and their four children.
Walls was taken to a nearby hospital and later released.
Walls’ attorneys claim the truck driver experienced a cough-related syncope event, which led to him temporarily losing consciousness, while Short’s legal team alleged the Marvin Keller driver fell asleep at the wheel because of driver illness or fatigue.
The eight-person jury in the U.S. District Court for the Eastern District of Kentucky entered a $10 million judgment in favor of Short’s wife and the couple’s two minor children.
Jon Heck, one of the attorneys who represented the Short family in the wrongful death case, said he is aware of Marvin Keller’s recent bankruptcy filing.
“We didn’t see eye to eye on any settlement,” Heck told FreightWaves.
Bankruptcy filing
In its filing, the company lists its assets as up to $10 million and its liabilities as between $10 million and $50 million. The trucking company states that it has up to 99 creditors and maintains that funds will be available for distribution to unsecured creditors once it pays administrative fees.
According to the Federal Motor Carrier Safety Administration’s SAFER database, the trucking company has 115 power units and the same number of drivers. In court documents, Keller said the trucking firm has dropped to 91 drivers.
On its website, the family-owned truckload carrier hauls time-sensitive regional freight, including food-grade commodities, consumer products and non-bulk hazardous materials.
Keller states the company’s “operations and profitability” have been affected “by increased fuel and other market conditions.”
Marvin Keller Trucking filed for bankruptcy after it was unable to negotiate a settlement agreement with the Short family, according to court documents sent to FreightWaves by its attorney, Sumner Bourne.
Court filings state the company can’t pay for fuel, employee wages and other operating expenses without access to its cash collateral. The company’s next payday is set for Friday.
Keller said that if the company is unable to pay its employees and maintain its employee benefits, “it will lose the employees to competitors and be unable to continue its operations.”
The company posted gross revenues of approximately $27 million in 2020 and around $28 million in 2019, according to court filings.
Among the company’s unsecured creditors are Joy Short and her two minor children of Mount Sterling, Kentucky, owed $10 million, which Marvin Keller disputes, as well as Big Al’s Towing of Cheyenne, Wyoming, owed nearly $29,000, and Lytx Inc., a video telematics provider headquartered in San Diego, owed $14,400.
A meeting of creditors has been set for May 19.
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