An Arkansas-based trucking company, forced to cease operations nearly a year ago after it was unable to climb out of debt following a five-year legal battle over a $23 million nuclear verdict, filed for Chapter 7 liquidation Monday.
In March 2020, RCX Solutions Inc. of Little Rock announced it was closing its doors after its bank refused to extend the carrier’s line of credit, citing the costly legal verdict.
“We kind of got the stool kicked out from under us because the bank said they were unable to work with us because we still had that [nuclear verdict] judgment hanging over our heads,” Randy Clifton Jr., president of RCX Solutions, told FreightWaves at the time.
Since 2015, RCX Solutions has been fighting a legal battle over a fatal crash that resulted in a $23 million “nuclear verdict” in 2017, Clifton said.
Nuclear verdicts are described as jury awards in which penalties exceed $10 million.
While the U.S. Circuit Court of Appeals for the 5th Circuit lowered the amount to $7.5 million in late 2019, it was too late to help the struggling carrier.
“These nuclear verdicts are driving some insurance companies out of the market, which is making insurance capacity tight,” Clifton, a third-generation trucking company owner, told FreightWaves at the time of the closure.
His father, Randy Clifton Sr., started RCX in 2001. He turned over the reins to the younger Clifton in January 2010 after suffering a heart attack.
“The remaining insurance companies are going to be able to charge really high rates, which is forcing a lot of smaller trucking companies out of business because they can’t afford to pay the rates,” Randy Clifton Jr. said. “It’s just a vicious cycle all the way around.”
Chapter 7 filing
In its filing, RCX Solutions lists its assets as up to $50,000 and its liabilities as between $1 million and $10 million. The defunct trucking company states that it has up to 49 creditors. The company maintains that no funds will be available for unsecured creditors once it pays administrative fees.
Among the company’s unsecured creditors, which are last in line for payment in Chapter 7 cases, are J&J Capital Funding Equipment of Saint George, Utah, owed nearly $977,000; Stoughton Rental and Leasing Co. of Little Rock, owed nearly $173,000; and Fleet One of Houston, owed more than $56,000.
According to RCX Solutions’ financials, its gross revenues were nearly $1.4 million in 2020. This is a significant drop from the $12 million the carrier reported in revenue in 2019.
A creditor’s meeting is scheduled for 8:30 a.m. Feb. 23, according to the petition filed in the U.S. Bankruptcy Court for the Eastern District of Arkansas.
Click for more articles by Clarissa Hawes.
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