Kentwood’s trucking company DIS Transportation files for Chapter 11 bankruptcy; lawyer sees an increase in deposits to come

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Falling freight rates coupled with the economic downturn that accompanied the COVID-19 pandemic has taken its toll on the trucking business DIS Transport LLC, leading the Kentwood-based company to file for Chapter 11 bankruptcy.

DIS Transportation and its affiliate DIS Express Inc., submitted its case to the United States Bankruptcy Court for the Western District of Michigan last week. The filing was the latest in a growing number of cases filed under Subchapter V of the U.S. Bankruptcy Code, which was created by the Small Business Reorganization Act passed by Congress last year and entered in effect in February.

Steve Bylenga, partner at Chase Bylenga Hulst PLLC, representing the company.
COURTESY PHOTO

This Chapter 11 bankruptcy designation is reserved for small businesses with debt under $ 7.5 million and offers a streamlined process by speeding up the schedule and reducing costs.

In its file, DIS Transportation detailed the financial blow it suffered in 2018 when freight rates per mile fell by 50%.

Although it worked with a consultant to eliminate overheads and reduce liabilities, the company was unable to get out of its financial hole, even after freight rates returned to pre-2018 levels shortly. before filing.

DIS Transportation reported liabilities of $ 568,532, including $ 262,096 with unsecured creditors.

The main unsecured creditors include PNC Bank ($ 99,810), based in Grand Rapids Repair of M6 trucks and trailers ($ 89,663.16) and based in New Hampshire Direct capital, who made three claims totaling $ 62,727.25 in unsecured debt, plus $ 18,000 in secured claims.

Based in Grand Rapids First community bank was also listed as a creditor for $ 51,591, of which $ 48,000 was secured by an automobile lien.

DIS Transportation reported total assets of $ 393,311, including $ 248,780 in machinery and equipment.

In 2018, DIS Transportation achieved nearly $ 8.5 million in revenue, followed by $ 6.5 million in 2019. However, in 2020, up to the filing date, DIS Transportation had generated just under $ 1.4 million in revenue.

The company is represented in the case by the Grand Rapids law firm Chase Bylenga Hulst SARL.

“DIS has been a successful business there for several years and in 2018 freight rates dropped significantly, which really had an impact on their ability to cover their overhead costs,” Steve Bylenga, partner at Chase, told MiBiz. Bylenga Hulst PLLC. “They’ve taken positive steps over the past couple of years to try to alleviate any issues with this.

“They called in a consultant. They were able to reduce about two-thirds of their debt by downsizing and selling unnecessary assets and were trying to reduce it to the point where they could meet their daily demands and just weren’t able to do it on time. . , especially when COVID hit in the spring. ”

The record shows that DIS Transportation reduced its liabilities from $ 1.7 million in 2019 to just over $ 500,000 this year.

“The first question I ask my small business clients is what is the exit strategy,” Bylenga said. “If the problem is you don’t have enough income, bankruptcy won’t help you. If they say, ‘Look, I need more time. There was a problem. This problem has been solved. I need time.’ We can do that. ”

Hold on

Bylenga is no stranger to the business of Subchapter V. In April, he worked with the pillar of Grand Rapids Violet East, a smokers’ clothing and accessories store that was the first entity in the Western District of Michigan to have a bankruptcy plan upheld under the Small Business Reorganization Act.

Bylenga said he expects more companies to use Subchapter V, especially manufacturing companies and businesses belonging to the hospitality industry, such as hotels, guesthouses and the restaurants.

As the pandemic continues, Bylenga has also seen a sharp increase in bankruptcy investigations.

“We are currently receiving a significant number of inquiries – a lot of people have been hanging on for six or seven months hoping to pass,” he said. “Most of these companies say we’re almost there, we’ll probably have to file in the near future.

“That’s why I think you’re going to see a substantial increase in deposits probably from January to March. Traditionally, you don’t see a lot of bankruptcies during the holiday season.

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