In the 11th hour of negotiations with the Teamsters Union for a new carhauler labor agreement, Performance Transportation Services last week filed for 1113-E relief in bankruptcy court, asking the court to approve a 15 percent wage cut
for its approximately 1,300 employees.

Section 1113 (e) allows a debtor to ask the court for temporary or interim relief on an emergency basis. The company must show that the changes sought are "essential to the continuation of the debtor's business" or needed "to avoid irreparable damage" to the company. This part of the bankruptcy code gives the court more latitude to determine changes to a collective bargaining agreement.

The filing followed the company's announcement May 29 that it would withdraw immediately from the multi-employer car hauler association and multi-employer bargaining. Jeff Cornish, president and CEO, explained in open letters to employees that this will allow the company to deal directly with the union, because its circumstances, he said, are now financially much different from the other companies in the multiemployer group.

Cornish criticized the Teamsters union for talk of a strike, "even though the Teamsters gave Allied a big wage break last year." Cornish also noted that a strike would be illegal, because even though the carhauler agreement expired at midnight June 1, it remains in effect on a yearly basis unless written notice of termination is served by either party at least 60 days proior to the date of expiration.

PTS and its subsidiaries - E and L Transport, Hadley Auto Transport and Leaseway Motor Transport - employ about 1,200 Teamster members. Combined, PTS' subsidiaries are the second largest Teamster carhaul employer behind Allied Holdings.

It's not the first time the company has had financial troubles, reported the website www.thedeal.com on May 22. "Performance Transportation Services Inc. won final approval of its $15 million debtor-in-possession financing Jan. 18. The Allen Park, Mich.-based auto transporter filed for Chapter 11 alongside 13 affiliates on Nov. 19, only 10 months after emerging from an earlier Chapter 11 case. Los Angeles private equity firm Yucaipa Cos. LLC got a majority stake in the company when it emerged from its first bankruptcy in January 2007."

Monday, the Teamsters released a statement saying its national carhaul negotiating committee is making progress and is on track to reach a tentative carhaul agreement when talks resume next week in Cleveland.

"Although we have not yet reached agreement, we made progress and we are confident we will have a solid agreement that will protect our members' job security, wages and benefits," said Fred Zuckerman, Teamsters Carhaul Division Director and lead negotiator. "Negotiations have been challenging due to the very difficult economic conditions facing the auto industry. However, we have strong momentum going into talks scheduled next week."

The current contract expired at 12:01 a.m. Sunday, June 1.