Taxi Firm Files for Bankruptcy
After months of speculation by competitors about its financial health, American Taxi, the county’s controversial choice to provide taxi service at John Wayne Airport, has filed for bankruptcy.
The company has promised to continue service at the airport with no interruptions, an airport spokeswoman said.
The firm’s president, Rick Shorling, notified John Wayne Airport officials this week that the company would seek protection under Chapter 11, which helps companies make an orderly and equitable settlement of obligations as they keep possession of the business. In its court filing, American Taxi said it has $10 million in assets but more than that in debt.
“They did inform us this week that they were filing for bankruptcy, and in fact they met with us on Tuesday and assured us they would continue to be in full compliance with the contract,” said John Wayne Airport spokeswoman Yolanda Perez.
Shorling said Friday the company is healthy, but that he filed for bankruptcy to ward off a hostile takeover by a rival Los Angeles-based taxi company.
“With the bankruptcy, nobody can do anything without court approval now,” he said. “We’re still doing our stellar performance at John Wayne Airport, where it’s business as usual.”
Late last year, American Taxi lost a bid to secure a lucrative franchise from the city of Los Angeles. The company spent more than $15,200 on lobbying efforts.
Some of American Taxi’s competitors--who lost the John Wayne contract in a bidding war--have often questioned the company’s finances. Under its contract with Orange County, American Taxi pays the county about $1.4 million over the three years. The cab company is not required to tell the county how much profit it makes on the contract, but estimates run from $5 million to $7 million.
American Taxi was awarded the county contract last year after the first place bidder failed to obtain adequate insurance for its cabs and was abruptly dropped.
American Taxi--whose owners once included prominent lobbyist Lyle Overby--won the contract despite having been in business for barely four months.
As a result, the county’s bidding process came under scrutiny. Then-Board of Supervisors Chairman Chuck Smith created an advisory committee to examine the process, and it is scheduled to make recommendations soon.
“We’re just about to come out with some new policies and procedures with the committee,” Smith said.
“Now, whether or not these changes would have prevented the county from selecting American Taxi, I don’t know, but this would be a good test to see if it would have prevented it.”
A few months after American Taxi won the contract, the U.S. Environmental Protection Agency recognized the firm for its lower-polluting fleet of 170 cabs, powered by compressed natural gas.
But the company spent heavily to buy the cars from the Ford Motor Co. American Taxi listed Ford Motor Co. among its creditors for a disputed sum of $454,068, as well as Ford’s credit company, which it owes $3.3 million.
