Computrex, Continued

Computrex, Continued

Copyright 2002, Traffic World Magazine

The president of Computrex International, which does business as Computrex Logistics, proclaimed recently that the U.S. Bankruptcy Court has given his company a clean bill of health and cleared it of any liability for its bankrupt spin-off, Computrex Inc.

"The action by the trustee and the court vindicates that the spin-off was all above board, well documented and taken with the utmost integrity," Computrex International President M. Cleve Collins said in a press release. "This should put to rest any concerns that we will be dragged into the bankruptcy proceedings."

The judge's order came at a price. Collins' firm was scheduled to pay $700,000 last week to the bankrupt firm to resolve more than $860,000 it owed to Computrex Inc. Collins said the money for repayment came from an outside investor whose identity could not be revealed.

In March 2001, Computrex Inc., Nicholasville, Ky., was split into three companies: Computrex International, Computrex Inc. and CX-IT, but the three companies were owned by the same stockholders and in the same percentages as the predecessor company. Last December, Computrex Inc. declared bankruptcy owing some 120 shippers about $25 million in transportation fees that were collected by the company's freight payment and auditing service but never paid to the transportation providers. Computrex International still operates as Computrex Logistics in Louisville, Ky. The third-party logistics provider now has 150 employees and 100 clients worldwide and offers supply-chain management, transportation planning, warehouse management, information technology and financial services, Collins said.

The self-proclaimed clean bill of health appears to be a bit of a simplification when you consider the Bankruptcy Court trustee's current stance toward Computrex Inc.

"We are sort of in a heavy investigation mode right now," John Morgan, attorney for Trustee James Lyon, said May 2. "Forensic accountants are already on board, approved by the court and they have been conducting their investigation. They have already been to Savannah, Ga., and met with Arthur Dana and his company. They are going to be up here (in Lexington, Ky.,) next week interviewing Computrex employees and former accounting people at Computrex."

Dana is the principle of Art Dana and Co., an accounting firm that tried to make sense of Computrex's muddled financial records in 2000 but declared the numbers unauditable. At the time the accountants said Computrex was already at least $16 million in the red and was avoiding insolvency only by manipulating the "float time" on funds deposited with them for payment of transportation bills.

On another front, Morgan said, "We've got David Klugman, the expert that was hired, doing his investigation on the preferences and on all the transfers that took place within 90 days of bankruptcy." Klugman is a consultant who was tasked with finding out whether some shipper clients of Computrex Inc. were given preferential treatment and avoided the fate of the many shippers that had to pay transportation fees twice, once to Computrex Inc. and a second time to the carriers who were stiffed by Computrex.

If the trustee convinces the judge that preferential treatment occurred, shippers who thought they had dodged a Computrex bullet could be ordered to return cash to the court for distribution to all the creditors. Any transfer of cash or other assets to individuals or companies within 90 days of the bankruptcy also could be reversed.

So with the recent bankruptcy court action the corporate entity called Computrex International is in the clear, but its owners, directors and executives are still fair game. Morgan predicted that some of those involved in Computrex International could be sued for actions they took "while wearing their Computrex Inc. hat."