Greyhound Given Permission to Pay Salaries, Expenses
BROWNSVILLE, Texas (AP) _ A federal bankruptcy judge Thursday authorized Greyhound Lines Inc. to pay salaries and operating expenses after union attorneys made sure the strike- bound bus company’s executives would not receive ″golden parachute″ bonuses.
A top Greyhound executive said after Thursday’s hearing that ″illegal strike-related violence″ forced the company to file Monday for Chapter 11 bankruptcy protection.
At the hearing, U.S. Bankruptcy Judge Richard S. Schmidt ordered the U.S. Trustee’s office to start setting up a single committee of unsecured creditors. He set the next hearing for June 28 in McAllen.
Dallas-based Greyhound, the nation’s largest bus transportation company, filed for Chapter 11 bankruptcy protection Monday to keep buses operating through the peak summer travel season.
The company has been hurt financially since a walkout three months ago by its 6,300 bus drivers.
″We have been given the ability to use cash to continue to operate our business in the ordinary course,″ George W. Hanthorn, vice president and general counsel for Greyhound, said after the hearing.
He said the judge’s order on operating expenses and an order Monday allowing pre-bankruptcy tickets to be honored would keep the buses rolling. Greyhound will have about 3,800 buses on the road at any given time, he said.
″Our customers will not see any change in the business as we have been operating,″ Hanthorn told reporters.
Hanthorn blamed strike-related violence for the bankruptcy filing.
″Greyhound has spent literally millions of dollars in legal fees, excess security costs, etcetera, to try to combat the illegal violence that we face during the strike and I attribute it exactly to that,″ he said.
Smith Williamson, secretary-treasurer of the Amalgamated Council of Greyhound Locals, rejected Hanthorn’s contention.
″There’s been a comedy of errors by (Greyhound chairman) Fred Currey. He figured the strike would be over in three days and it didn’t work,″ Williamson said Thursday.
″Currey has to manufacture some reason why he’s in this position now, so he’s laying the blame at the feet of the union.″
Since the strike began, there have been dozens of incidents of shooting and rock-throwing at buses. Early in the strike, a picketer was crushed by a bus in California.
Attorneys for Greyhound and the Amalgamated Council of Greyhound Locals spent part of Thursday morning negotiating how Greyhound intended to pay $2.5 million in salaries and up to $27 million in other employee vacation, medical and workers’ compensation benefits.
The main sticking point was the $2.5 million in pre-bankruptcy wages and salaries, including paychecks issued but not yet cashed. Negotiators agreed to limit pre-filing wage payments to $2,000 per employee.
″I just didn’t want any golden parachutes adopted that would be weighted in favor of Greyhound executives and against the wage earner,″ said union attorney Shelby Jordan. Golden parachutes are contract provisions that grant severance payments to top executives if they lose their jobs in a change of control at their company.
Asked whether he intended to seek a trustee to manage Greyhound, Jordan said he had no ″plots or plans″ to ask the bankruptcy court to take any drastic steps, and was waiting to see how Greyhound handled the bankruptcy.
Left unresolved is whether the company will have to pay back wages to striking workers in an unfair labor practices claim set to be litigated before the National Labor Relations Board in Washington this fall.
Judge Schmidt approved Greyhound’s requests to pay $2 million in accumulated COD payments owed to various shipping customers, and to honor pre- filing deposits for charter trips.
Court documents indicate Greyhound’s largest unsecured creditors are financial services and insurance companies. But a list of debt holders stretches out over 1,800 pages, ranging from junk bond holders to parts and tire suppliers.
Schmidt also allowed the company to file a single disclosure statement for all six Greyhound entities involved in the bankruptcy.
The courtroom was packed with 18 attorneys for various parties in the case, including Greyhound, the union and creditors.
The preliminary order allowing operating expenses lasts until the June 28 hearing.
Schmidt also allowed the company to hire the Houston law firm of Weil, Gotshal & Manges as its lead counsel.
An hour before the hearing, Greyhound announced it was withdrawing a tender offer for junk bonds.
″We have withdrawn our tender offer so that we can focus on mapping out a sound debt restructuring plan for the court,″ said J. Michael Doyle, senior vice president and financial officer.
On May 21, Greyhound asked holders of $225 million of its junk bonds to sell them back at steep discounts, totaling about $90 million. The company said the move was crucial to avoid the bankruptcy filing.
The offer was to expire June 18.
Greyhound attorneys said they filed in Brownsville because its Eagle Bus Manufacturing Inc. subsidiary is based in the South Texas city.