The Owner Operator Independent Drivers Assn. reports progress in getting owner-operators their money back from two companies in bankruptcy proceedings.
An Ohio bankruptcy court has ruled in favor of the Owner-Operator Independent Drivers Association on motions in its class action suit filed against Intrenet Inc., four subsidiary companies of Intrenet and Huntington National Bank.
Intrenet Inc. ceased operation on Jan. 2, 2001, and more than 1,000 owner-operators leased to Roadrunner Distribution, Roadrunner Trucking, Advanced Distribution System, and Eck Miller Transportation were terminated as of that date. None have had their escrow accounts returned by the companies.
OOIDA sued to separate from the bankruptcy estate, the escrow funds held by the defendants at the time of the bankruptcy. The suit also requested the return of all escrow funds to individual owner-operators, prior to the payment of the amounts due to creditors.
Intrenet's attorneys argued that because the escrow funds were not segregated or handled by a third party, they weren't really a "true" escrow per Ohio state law.
In his ruling, the U.S. Bankruptcy ruled that escrow funds are subject to a statutory trust created by the federal regulations regardless of who holds the funds. He dismissed the carriers' and Huntington's argument that trust funds must be held by a third party, citing the federal regulation's definition of escrow funds as "money deposited by the lessor with either a third party or the lessee…"
Judge Aug went on to declare these statutory trusts could not be included in Intrenet's bankruptcy estate.
"We are very pleased the court has recognized that escrow funds are created and regulated by the federal truth-in-leasing regulations," said OOIDA President Jim Johnston. "This ruling spells out clearly the rights of owner-operators to those funds held in trust, especially when carriers go into bankruptcy either through circumstance or as a strategy to hide from legal actions against them."
OOIDA was also recently granted a motion to "intervene generally" in bankruptcy proceedings going on at Burlington Motor Carriers. The ruling allows the association to make the case that the owner-operators are entitled to a share of the company's revenues. OOIDA Vice President Todd Spencer explains that normally in bankruptcy cases, owner-operators are considered unsecured creditors, and thus are among the last in line to get any money owed to them by the bankrupt company.
Burlington had filed for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code in July, shortly after OOIDA and two of its members filed a complaint in U.S. District Court in Indiana, claiming violations of the federal truth-in-leasing regulations.
With the administrative dismissal of its original suit under the bankruptcy protection, OOIDA chose to pursue its complaints against the Daleville, Ind., carrier in the bankruptcy court.
OOIDA's lawsuit alleges that despite Burlington's agreement and obligation to charge back premiums for insurance coverage purchased through the company, it was violating federal truth-in-leasing regulations by deducting amounts from owner-operator compensation substantially in excess of the actual premiums. The complaint also alleges that insurance information was not properly supplied by Burlington when requested, which is also a violation of the regulations.
An Ohio bankruptcy court has ruled in favor of the Owner-Operator Independent Drivers Association on motions in its class action suit filed against Intrenet Inc., four subsidiary companies of Intrenet and Huntington National Bank.
Intrenet Inc. ceased operation on Jan. 2, 2001, and more than 1,000 owner-operators leased to Roadrunner Distribution, Roadrunner Trucking, Advanced Distribution System, and Eck Miller Transportation were terminated as of that date. None have had their escrow accounts returned by the companies.
OOIDA sued to separate from the bankruptcy estate, the escrow funds held by the defendants at the time of the bankruptcy. The suit also requested the return of all escrow funds to individual owner-operators, prior to the payment of the amounts due to creditors.
Intrenet's attorneys argued that because the escrow funds were not segregated or handled by a third party, they weren't really a "true" escrow per Ohio state law.
In his ruling, the U.S. Bankruptcy ruled that escrow funds are subject to a statutory trust created by the federal regulations regardless of who holds the funds. He dismissed the carriers' and Huntington's argument that trust funds must be held by a third party, citing the federal regulation's definition of escrow funds as "money deposited by the lessor with either a third party or the lessee…"
Judge Aug went on to declare these statutory trusts could not be included in Intrenet's bankruptcy estate.
"We are very pleased the court has recognized that escrow funds are created and regulated by the federal truth-in-leasing regulations," said OOIDA President Jim Johnston. "This ruling spells out clearly the rights of owner-operators to those funds held in trust, especially when carriers go into bankruptcy either through circumstance or as a strategy to hide from legal actions against them."
OOIDA was also recently granted a motion to "intervene generally" in bankruptcy proceedings going on at Burlington Motor Carriers. The ruling allows the association to make the case that the owner-operators are entitled to a share of the company's revenues. OOIDA Vice President Todd Spencer explains that normally in bankruptcy cases, owner-operators are considered unsecured creditors, and thus are among the last in line to get any money owed to them by the bankrupt company.
Burlington had filed for voluntary reorganization under Chapter 11 of the United States Bankruptcy Code in July, shortly after OOIDA and two of its members filed a complaint in U.S. District Court in Indiana, claiming violations of the federal truth-in-leasing regulations.
With the administrative dismissal of its original suit under the bankruptcy protection, OOIDA chose to pursue its complaints against the Daleville, Ind., carrier in the bankruptcy court.
OOIDA's lawsuit alleges that despite Burlington's agreement and obligation to charge back premiums for insurance coverage purchased through the company, it was violating federal truth-in-leasing regulations by deducting amounts from owner-operator compensation substantially in excess of the actual premiums. The complaint also alleges that insurance information was not properly supplied by Burlington when requested, which is also a violation of the regulations.
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