Velocity Express Corporation (“Velocity Express”) and its 12 affiliates who also filed bankruptcy on September 24, 2009 (the “Debtors”) have requested authority to file a consolidated list of the 30 largest unsecured creditors (the “Top Unsecured Creditor List”) in lieu of a separate list for each of the Debtors.  The Top Unsecured Creditor List truly is remarkable – it includes 7 law firms owed a total of $2,553,339.  In addition, Houlihan Lokey Howard & Zukin Capital Inc. is sixth on the list at $645,345.  The complete Top Unsecured Creditor List is provided below.

The Debtors’ petitions and the first day motions are supported by the declaration of Vincent A. Wasik, Chief Executive Officer (the “Wasik Declaration”).  This petition gives a strong indication the reason for the concentration of law firms on the Top Unsecured Creditor List.  The Wasik Declaration explains:

Debtors are also party to at least ten (10) class actions and have received numerous assessments from state administrative agencies alleging that the Debtors improperly classified individuals as independent contractors rather than employees. While the Debtors dispute these allegations, the financial burden of fighting these claims and paying various settlements has exacerbated the Debtors’ financial struggles. [Emphasis added]

For Velocity Express, the problem presented by employee versus contractor classification is huge.  According to the Wasik Declaration, the Debtors have approximately 1,263 employees and the Debtors “also use the services of 2,424 of independent contractors who are drivers… .”

The Debtors have listed the following creditors as being their top 30 largest unsecured creditors.  None of the claims were listed as contingent, unliquidated, disputed or subject to setoff.  Accordingly, that column has been deleted.  The following list also does not include any creditor contact information that may have been included by the Debtors.

Name of Creditor Nature of claim Amount of claim
St. Paul Fire & Marine Insurance Trade Debt $1,799,633.00
California Employment Development Department Settlement $744,528.00
Cop – Western, LLC Rent $860,000.00
Littler Mendelson, PC Legal Fees $874,177.00
Bank of America $788,634.00
Houlihan Lokey Howard & Zukin Capital Inc. Trade Debt $645,345.00
City Express Courier Services Trade Debt $450,000.00
Irish Twin Cities LLC Rent $450,000.00
Budd Lamer Gross Rosenbaum Greenberg Legal Fees $431,461.00
Scura Rise Professional Fees $400,000.00
Jasinski and Williams PC Legal Fees $390,007.00
King & Spalding Legal Fees $372,003.00
Arthur J. Gallagher & Co. Trade Debt $364,528.00
Bush Truck Leasing Lease $363,817.00
Morton West LLC Rent $310,000.00
Sunbeam Development Corporation Rent $269,823.00
American Expediting Trade Debt $248,000.00
Jones Day Legal Fees $244,796.00
UHY LLP Trade Debt $231,105.00
Yarico Inc. Trade Debt $225,047.00
Data Sales Co., Inc. Lease $211,470.00
Arthur. J. Gallagher Co. of NJ Inc. Insurance $209,412.00
First Insurance Funding Corp. insurance $209,205.00
Premium Financing Specialists Insurance $208,120.00
Labor Ready Northwest., Inc. Trade Debt $196,361.00
4 Revay Road LLC Rent $141,145.00
AT&T Mobility Trade Debt $127,205.00
MCI Telecommunications Trade Debt $125,391.00
Ohashi & Priver Legal Fees $123,513.00
DCT Boggy Creek Florida, LP Rent $120,944.00
Scopelitis, Garvin, Light & Hanson, PC Legal Fees $117,382.00

The Top 30 List does not include: (1) persons who come within the definition of “insider”; or (2) secured creditors, unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the largest unsecured claims.

Bankruptcy Rule 1007(d) provides that a debtor shall file “a list containing the name, address and claim of the creditors that hold the 20 largest unsecured claims, excluding insiders.” Fed. R. Bankr. P. 1007(d).  In the case of a multi-debtor filing, it is likely that many creditors are shared among certain of the debtors.  This is especially the case where the debtors operate as a single business enterprise.  Under these circumstances and provided that there is a request for joint administration, it is common for multiple, related debtors to request authority to file a single, consolidated list of their collective largest general unsecured creditors.  These requests usually are granted by the bankruptcy court.

The Top Unsecured Creditor List is never to be considered a waiver of any defense to or “allowability” of a listed claim or an admission of the amount of any listed claim.  It is common for the amount of the claims to shift and sometimes a claim that is initially is undisputed is later disputed.  Creditors should always consult the official claims register.