A South Carolina company that remanufactured locomotives and provided railcar servicing and repairs for railroads filed Chapter 7 this week, just days after one of its customers sought to force the company into arbitration for alleged breach of contract.
Motive Power & Equipment Solutions, doing business as MP&ES, headquartered in Greenville, South Carolina, filed its petition in the U.S. Bankruptcy Court for the District of South Carolina on Tuesday.
According to court documents, the company said it was forced to close because of “cash flow issues” after one of its major customers “defaulted on a project payment” of over $2.5 million.
Just days before MP&ES filed its bankruptcy petition, one of its customers, Durango & Silverton Narrow Gauge Railroad Inc., headquartered in Durango, Colorado, filed a petition for arbitration against the company. It claimed MP&ES failed to meet established deadlines to produce and deliver components for two diesel locomotives costing the passenger railroad over $3 million.
MP&ES’ attorney Randy Skinner did not return FreightWaves’ request for comment.
In its filing, the company lists assets of up to $50,000 and liabilities of $1 million to $10 million and has up to 199 creditors. The company maintains that no funds will be available to unsecured creditors after administrative expenses are paid.
Several trucking, logistics and rail services companies, listed as unsecured creditors, are owed millions of dollars, however, the exact amounts the companies are owed isn’t listed in the petition.
According to the Greenville County Register of Deeds office, David Wilkerson, who served as president and CEO of MP&ES, sold the land where the company is located for $475,000 to Palmetto Trust of SC LLC in August without alerting customers.
In court documents, an employee who works for one of Durango’s sister companies drove to the MP&ES site in Greenville in January and noticed that the company’s signs had been removed and the property “appeared to have been deserted for a while.”
A creditors meeting is set for 9:30 a.m. on April 14.
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