The first meeting of creditors of bankrupt RV delivery firm Morgan Drive-Away is scheduled for Nov. 22 in South Bend, Ind., according to the Elkhart (Ind.) Truth.
The Elkhart firm shut down early in October after deciding it could not afford to pay higher liability insurance premiums. Federal law prohibits transportation firms from operating without liability insurance.
Although Morgan Drive-Away, a unit of Morgan Group Inc., filed for protection from creditors under Chapter 11 of the Bankruptcy Code, which implies an effort to continue operating while attempting a financial restructuring, the Morgan Group CEO said the firm will be liquidated.
Morgan Drive-Away has obtained debtor-in-possession (DIP) financing so it can continue paying its remaining employees. Those employees are responsible for finding buyers willing to pay “maximum value” for the company’s assets so it can repay its creditors, said Anthony Castor, Morgan Group’s CEO.
Castor believes Morgan Drive-Away will raise enough cash from asset sales to fully repay its secured creditors, a group that includes GMAC Commercial Credit, which is owned $6.35 million.
Concerning Morgan Drive-Away’s unsecured creditors, Castor said, “We’ll do our best.”
It will take “several months” to complete the sale of Morgan Drive-Away’s assets, Castor added.
Morgan Drive-Away owes $4.43 million to its 20 largest unsecured creditors, including Comdata, which is owed $2.91 million. Morgan Drive-Away hired Comdata to pay its independent drivers through ATM machines around the country. Comdata stopped allowing drivers to draw money from their accounts when Morgan Drive-Away shut down on Oct. 3.
The Morgan Drive-Away closure forced several RV manufacturers to scramble to find alternate delivery services companies. However, RV manufacturers, generally, were aware of Morgan Drive-Away’s precarious financial position and were able to quickly find other delivery firms.