A court hearing today could lead to the loss of nearly 300 trucks operated by Riss International Corp., once a thriving nationwide truck firm based here.
Riss faces a hearing on a plea by truck maker Navistar International Corp., whose financing arm has asked U.S. Bankruptcy Court Judge Frank Kroger to return nearly 300 trucks leased by Riss.Should that happen, sources close to the case say, the truckload carrier would see its fleet gutted.
Riss filed Nov. 3 for protection from creditors under Chapter 11 of the federal bankruptcy code.
Asked whether Riss might have to liquidate, Riss attorney Gene DeLeve told The Journal of Commerce: "If we were forced to return the major part of our trucks to Navistar, you can draw your own conclusions about how that would affect our operations."
Edward Schmitt, a local attorney for Navistar, declined comment beyond referring to what was already in the public domain about the case.
Navistar Financial Corp. claims that Riss is $500,000 behind in payments on $6.8 million on trucks bought or leased from 1984 to 1988, and that Riss failed to provide insurance for them.
Attorneys for Chicago-based Navistar presented their side of the case before Judge Koger last week.
This afternoon, Riss is slated to present its case for retention of the trucks, and may find out immediately afterward whether it can keep trying to reorganize under Chapter 11.
Judge Koger told The Journal of Commerce he prefers to rule from the bench whenever possible and expected to do so in this case, depending on how the hearing proceeds.
Observers agree with the assessment Riss itself gave in the original bankruptcy filing; that diminished earnings from rate wars in the trucking industry plus the economic slowdown led to the company's problems.
Riss reportedly listed debts Nov. 3 of $16.957 million and assets of $16.539 million.
The downfall did not come overnight. A 1984 industry directory said Riss had 1,081 truck tractors and 1,685 trailers.
The Official Motor Carrier Directory now credits Riss with 575 tractors and 1,455 trailers, though industry analysts suspect many of those trucks may be held by owner-operators under contract to Riss.
Local reports say some contract drivers have stopped working for Riss until they are paid, and that some company employees have been laid off.
Navistar filed suit last summer after Riss allegedly fell about $800,000 behind in installment payments, but dropped the suit when Riss caught up in early August, a source close to the case said.
Then, Navistar charges, Riss fell behind again, missing September and October payments and now facing the November payment.
The 62-year-old carrier was described in local news accounts as once one of the most profitable truck lines in the country.
Mr. DeLeve said the problems did not arise from the loss of any particular customer.
A trucking analyst, John Kultgen of Duggan and Co. Investment Securities here, said, "I think (Riss) just faced the same competitive pressures that a whole lot of other trucking firms have." That industry has "rapidly turned into a world where you have to have a particular niche or be a giant able to achieve economies of scale," he added.
Mr. Kultgen would not predict what happens next to Riss, but noted, "I've seen a number of Chapter 11 bankruptcies in the trucking business, and I've yet to see one return to life in any kind of form like it was before."