Miami trucking company, 5 affiliates file for bankruptcy

November 5, 2024

A Miami trucking company and its five affiliates with more than 400 drivers recently filed for Chapter 11 bankruptcy protection.

Star Transportation PA Inc., doing business as Star Transportation of Miami, filed for bankruptcy protection on Friday in the U.S. Bankruptcy Court for the Southern District of Florida.

A day later, its five affiliated companies – Finance Solutions LLC, MDL Business Group LLC, Star Transportation A Inc., Star Truck Service Inc. and US Express Line LLC – also filed for Chapter 11.

Star Transportation has 411 drivers and 233 power units, according to the Federal Motor Carrier Safety Administration’s SAFER website.

The company’s trucks had been inspected 507 times, and 103 had been placed out of service in a 24-month period, resulting in a 20% out-of-service rate. This is slightly lower than the industry’s national average of around 22.3%, according to FMCSA.

The trucking company’s drivers had been inspected 1,018 times over the same 24-month period, with 13 drivers being placed out of service, resulting in a 1.3% out-of-service rate. This is significantly lower than the national average of around 6.7%, according to FMCSA.

In the past two years, the company’s trucks had been involved in three fatalities, five injury crashes and 24 tow-aways.

Its 23-page petition lists assets of up to $1 million and liabilities of between $10 million and $50 million. The petition lists the number of creditors as up to 99 and states that funds will be available for distribution to unsecured creditors.

The bankruptcy petitions, which seek to reorganize, list Victor Khramov as the president and 100% shareholder of all six entities.

Star Transportation and its entities are represented by bankruptcy attorney Joseph A. Pack of Pack Law in Miami. FreightWaves has reached out to Pack for comment.

On Sunday, U.S. Bankruptcy Judge Corali Lopez-Castro granted Star Transportation and its affiliates’ emergency motion for joint administration of the Chapter 11 cases and to file a consolidated case management summary on an interim basis.

The court also approved the trucking companies’ motion to enter into a post-petition factoring agreement with RTS Financial Services, headquartered in Overland Park, Kansas, on an interim basis. Court documents stated that Star Transportation did not have “sufficient unencumbered cash or other assets to continue to operate their business during the Chapter 11 cases or to effectuate a reorganization absent interim approval of the proposed DIP facility.”

In a court filing, Khramov said the trucking industry has been in a state of distress for several years, but that “the situation in 2024 has reached unprecedented levels, with a cascade of negative trends creating a perfect storm of financial distress and widespread collapse.”

Khramov also blamed rising fuel costs, increased insurance claims, and the cost of maintaining and repairing trucks and trailers, which has skyrocketed, with some repair costs nearly triple what they were a few years ago, according to court documents.

Khramov stated that he maintains a fleet of 219 trucks and 235 trailers, which include leased and owned equipment.

The move to file for Chapter 11 came after Star Transportation and its entities learned that one of its lenders had issued an order for the repossession of 47 of its financed trucks, according to court documents.

Star Transportation has until Nov. 12 to submit its top 20 largest unsecured creditors as well as its corporate ownership statement. The companies’ schedules of assets and liabilities along with its statement of financial affairs (SOFA) is due on Nov. 15.

The decision to file for bankruptcy protection comes nearly a week after two former workers of Star Transportation filed a lawsuit in federal court, alleging that the trucking company and its entities misclassified workers as independent contractors instead of employees in violation of the Fair Labor Standards Act.

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