Chapter 11 bankruptcy proceedings for trucking company Wyotrans, doing business as National Freight Carriers, have taken a rocky turn after two of its largest secured creditors claim they haven’t been paid in two months for leased or rented equipment being used to haul freight and that the carrier is also behind on insurance premium payments.
Besides its bankruptcy woes, the two men involved in the daily operations of Arizona-based Wyotrans, David Allen and Jeremy Louder, have ties to at least three other trucking companies set up through various LLCs over the last five years.
U.S. Bankruptcy Judge Daniel P. Collins has set a hearing for Wednesday after claims from Wyotrans’ insurance company, IPFS Corp., that it is owed nearly $84,000 for its post-petition monthly payments for July and August.
In its motion, IPFS seeks “authority to cancel certain insurance policies and to collect all unearned premiums” owed to the insurance company.
In court filings, Penske states that Wyotrans leases and rents approximately 26 trucks and trailers and owes it more than $560,000 in post-petition charges.
In its motion, Penske claims Wyotrans stopped paying the leasing company’s charges on Aug. 1, while at the same time continuing to use and possess its equipment “in the operation of its business.”
After initially agreeing to return the short-term units by Sept. 15, Penske claims Wyotrans has failed to return them.
Allan NewDelman, Wyotrans’ attorney, said the company was forced to file for bankruptcy protection after one of the units it leased from Penske was involved in a single-vehicle accident. The towing company charged over $100,000 to haul off the equipment, which Penske paid but sought reimbursement of the towing bill from Wyotrans, which the company didn’t have on hand.
Wyotrans, doing business as National Freight Carriers, filed for Chapter 11 bankruptcy protection in May in the U.S. Bankruptcy Court for the District of Arizona.
In its bare-bones petition, the company listed its assets ranging from $100,000 to $500,000 and its liabilities as between $500,000 and $1 million. At the time, Wyotrans estimated that funds would be distributed to unsecured creditors.
Christopher C. Simpson is serving as a Chapter 11 Subchapter V trustee in the Wyotrans bankruptcy case.
“It’s a complicated case,” Simpson said at the Chapter 11 status hearing in July. “It’s a very difficult business to run, but we are optimistic today.”
However, at the Wyotrans’ status hearing in early September, Simpson said he was less optimistic.
“Part of my communication to the court … was going to be that we are going to be hitting some rough water here,” Simpson said. “There does seem to be an uptick in unpaid administrative fees, a significant potential uptick. There are some disputes among the parties regarding accounting. So I wanted to let the court know that my prior cautious optimism is now reverted to just caution.”
Who owns Wyotrans LLC? It’s complicated
Michelle Allen is listed as the managing member of BMA LLC, which was incorporated on Dec. 3, 2019, in Sheridan, Wyoming. Allen signed Wyotrans’ bankruptcy petition.
The incorporation paperwork also lists Allen as the chief executive manager and her husband, David Allen, as the executive director.
Court filings in other cases allege David Allen places assets in the names of his wife and son, Grayden Allen, to avoid creditors.
Prior to entering the trucking industry, Allen and Louder spent time in federal prison on fraud-related charges. Both still owe millions in restitution to victims in separate fraud schemes. No charges have been filed against Allen or Louder related to Wyotrans’ Chapter 11 bankruptcy.
David Allen, 44, of Gilbert, Arizona, along with four of his family members who owned a boat dealership, was convicted of defrauding banks out of $5.4 million in January 2012. He was sentenced to 37 months in prison followed by five years of supervised release. He was also ordered to pay more than $1.1 million in restitution since his release in June 2014.
Since that time, David Allen has only paid around $12,000 of the $1.1 million he owes, according to the U.S. Attorney’s Office Financial Litigation Unit.
Allen’s business partner, Louder, 43, of Plano, Texas, was convicted of conspiracy to commit mail fraud in the U.S. District Court for the Eastern District of Texas. Lounder served 60 months in prison and was ordered to pay $17 million in restitution to his victims. Federal prosecutors claim Louder, co-founder of Quadwealth, conspired to devise a scheme to defraud investors by promising them high rates of return on real estate and securities investments.
Louder is listed as the president of MercTrucking and Mercury Holdings, with the addresses being the same as BMA LLC’s in Sheridan, Wyoming. Wyotrans listed that it previously operated its trucking business under the name MercTrucking in its bankruptcy filing.
Some of the equipment the trucking company leased through Penske was through GBA LLC, which was formed on April 2, 2020, in Sheridan, Wyoming. David Allen’s son, Grayden Allen, is listed as the sole member and manager of GBA. According to court filings in another case, Grayden Allen was only 19 years old at the time and was likely on or had just returned from an overseas missionary program with the Church of Jesus Christ of Latter-day Saints.
Legal troubles
According to court documents in another case, GBA LLC obtained a loan to purchase a house the family was renting in Gilbert, Arizona, in October 2020. The government placed a lien on the property in November as the only activity on the account was deposits from David Allen or BMA LLC.
Since August 2021, the government has been engaged in settlement discussions after David Allen wanted to refinance the property but continued to send incomplete financial statements to the government and title company.
Lani Carr, widow of Gabriel Fuentes Jr, filed a lawsuit, alleging fraud claims against Louder and David Allen in Bexar County, Texas, in September 2020. Carr claims that shortly after the couple started a hotshot transportation business, SLK G, LLC, with Louder and Allen in November 2019, Louder started funneling money from SLK’s business account to his entities, including Mercury Holding, according to the lawsuit.
Carr claims her signature was used without her permission by Louder to buy new equipment and that he wouldn’t provide her or Fuentes copies of the company’s profit and loss statements. Fuentes died unexpectedly on the road in April 2020. In May, she alleges Louder modified the SLK operating agreement using an encrypted program that showed Louder owning 66% and Carr owning only 33%. The partnership agreement listed Carr and Fuentes as owning 50% of the business.
Disclosure: FreightWaves SONAR is listed as an unsecured creditor of Wyotrans.
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