Tucson: SARS Auto Transporters Emerges from Chapter 11

A rare bankruptcy success

Auto-transport firm leaves Ch. 11 with new outlook

By Dan Sorenson

ARIZONA DAILY STAR 7/13/2010

For most companies, Chapter 11 bankruptcy is a hospice, not a hospital.

So, when SARS Auto Trans­porters of Tucson emerged from bankruptcy June 30, more than two years after filing for protec­tion from its creditors, the com­pany had beaten the odds.

Back on its feet, SARS now has 15 drivers — most based in Tucson — using 18-wheelers to move cars, primarily between dealers or between auto auc­tions and dealers. The company operates mainly between Tuc­son, Phoenix, Las Vegas and Los Angeles.

The company has its own mechanics and an office and sales staff working out of the company headquarters at 4620 S. Country Club Road.

SARS, founded in 1992 as Southwest Auto Re, was pur­chased by businessmen Kent and Dale Bauman in 2006. Neither had any experience in trucking. KentBauman had worked for Intuit but decided not to move when the company moved his unit out of Tucson. After two years of searching, he bought SARS. Soon, the econo­my crumbled.So did SARS’rev­enue stream. But not its bills.

Marginally profitable contracts and trucks with payments longer than their future added to the recession’s ef­fect, said SARS general manager Steve Cun­ningham, an auto­transport veteran and former competitor.

SARS filed for protection with 65 employees and came out with 40. There were plenty of days when Kent Bauman said he was ready to turn out the lights, close the door and let the creditors fight it out over the compa­ny’s bones. He credits Cun­ningham with leading them through the grim days.

Cunningham says he had his own dark days, but hav­ing 40 families dependent on the company for food and shelter kept him going.

Still, a $200,000 month­ly nut — rent, fuel, insur­ance, truck payments, pay­roll — was daunting.

The numbers behind Chapter 11 successes are no less daunting.

Nationwide, it’s been es­timated that only 25 to 30 percent of Chapter 11 cases result in a confirmed plan of reorganization — the final step before emergence from bankruptcy. The rest are dismissed or converted into Chapter 7 liquidation cases. In Arizona, out of 404 Chapter 11 cases filed in 2008, only 56 have resulted in confirmed reorganiza­tion plans to date, accord­ing to Nancy Dickerson, chief deputy clerk of the Arizona district of U.S. Bankruptcy Court.

SARS’ bankruptcy attor­ney, Eric Slocum Sparks, said he negotiated away millions of dollars in debt on what he said were over­valued assets, including equipment and customer lists.

Sparks said the Bau­mans’ willingness to dig into their own pockets probably carried weight with the judge.

Complicating the healing process for SARS were oth­er companies in bankrupt­cy. Bauman said several car-dealer clients failed, in­cluding one large Tucson used-car dealer that folded while owing SARS $15,000.

Cunningham and Bau­man are grateful to the dealers who stuck with them.

Clyde Wanslee Auto Sales owner Tom Epperson Jr. said he stuck with SARS and other companies in bankruptcy, as long as they did what they said. He says SARS did. “We’re all in this together,” Epperson said.

But not all customers stuck with SARS.

“People don’t under­stand bankruptcy,” Cun­ningham said. He heard about one of his drivers making a stop in Las Vegas and being told by a driver from another company that he might as well walk away, that the SARS driver might have his rig seized any moment.

Bauman says bank­ruptcy shook his confi­dence.

“My whole life I have been successful in every­thing I’ve done. You go into bankruptcy, you were wealthy. Maybe I’m not as good as I thought. You come out humbler. You come out more relation­ship- focused,” says Bau­man.

But he says there is also a positive side.

“There are dealers in town that I would do any­thing for because they’ve stayed with us.”

Contact reporter Dan Sorenson at 573-4185 or dsorenson@azstarnet.com