Case 16-26550

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MARYLAND
(Greenbelt Division)
In re:

BLUE STAR GROUP, INC.

Debtor
*

*
*

In re:

BARWOOD, INC.

Debtor
*

*
*

CHECKER TRANSPORTATION COMPANY, *

INC.
Debtor
*

*
*

CITY LEASE, INC.

Debtor

Case No.: 16-26550-TJC

(Chapter 11)

Case No.: 16-26552-TJC

(Chapter 11)

Case No.: 16-26553-TJC

(Chapter 11)

Case No.: 16-26551-TJC

(Chapter 11)

Debtor

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FLEET TECH, INC.

*
*

In re:

In re:

In re:

Case No.: 16-26548-TJC

(Chapter 11)

Case 16-26550

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In re:

SILVER SPRING TRANSPORTATION

COMPANY

Debtor
*

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Case No.: 16-26555-TJC

(Chapter 11)

*
*

DEBTORS EMERGENCY MOTION FOR ENTRY OF AN ORDER

PURSUANT TO RULE 1015(b) OF THE FEDERAL RULES OF BANKRUPTCY
PROCEDURE DIRECTING JOINT ADMINISTRATION
OF THE DEBTORS REORGANIZATION CASES

Blue Star Group, Inc. (BSG), Barwood, Inc. (Barwood), Checker

Transportation Company, Inc. (CTC), City Lease, Inc. (City Lease), Fleet Tech, Inc.
(Fleet Tech), and Silver Spring Transportation Company (SSTC), Debtors and
Debtors-in-Possession, (collectively, the Debtors), by counsel, jointly file this
Emergency Motion for Entry of an Order Pursuant to Rule 1015(b) of the Federal Rules
of Bankruptcy Procedure directing the Joint Administration of the Debtors
Reorganization Cases (the Motion), and in support thereof state as follows:
Jurisdiction and Venue
1.

This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157

and 1334, and Bankruptcy Rule 1015(b). This matter is a core proceeding, pursuant to 28
U.S.C. 157(b)(2).
2.

Venue is proper pursuant to 28 U.S.C. 1408 and 1409.

3.

This Motion is made pursuant to section 105(a) of title 11 of the United

States Code (the Bankruptcy Code) and Rule 1015(b) of the Federal Rules of
Bankruptcy Procedure (the Bankruptcy Rules).

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Background
4.

On December 20, 2016, the Debtors each filed voluntary petitions for

relief under Chapter 11 of the Bankruptcy Code, and, pursuant to 1107 and 1108 of
the Bankruptcy Code (the Petition Date) , have each continued in the possession of
their properties and management of their businesses as Debtors-In-Possession.
5.

Barwood was founded in 1964 by Henry Woodfield and Harry Barnes,

both now deceased, with 45 taxis. Over the past more than 50 years, the company has
grown into a diversified ground transportation company located in Montgomery County,
Maryland. Collectively, the Debtors and certain non-debtor driver partners have a taxi
fleet of approximately 457 vehicles and constitute the largest fleet of taxicabs in
Montgomery County.
6.

The Debtors and certain non-debtor affiliates generated revenues of

approximately $7.1 Million in 2015 and $3.3 Million for the first 7 1/2 months of 2016.
As of December 31, 2015, the Debtors and certain non-debtor driver partners had
approximately $4.5 Million in assets and approximately $5.4 Million in liabilities. The
Debtors have 57 employees.
7.

The Debtors previously filed voluntary Chapter 11 petitions on January

29, 2007 and their Joint Fourth Amended Plan of Reorganization (the Fourth Amended
Plan) was confirmed by this Court on March 15, 2010. The Fourth Amended Plan was
funded primarily through the sales of Personal Vehicle Licenses (PVLs). Initially, the
Debtors were able to sell PVLs for $65,000. However, a combination of factors
contributed to depress the market for PVLs, including an inability to find third party
financing and later, competition from Uber and Lyft.

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Although ride sharing services such as Uber and Lyft have existed since

2012, their entry into the Montgomery County transportation marketplace did not make
any substantial impact until 2014. These services began to provide a substantial number
of rides to the public in Washington D.C. and quickly spread into the suburbs. These
services entered into the local market without complying with any regulations, allowing
them to offer fares that were substantially lower than the regulated prices of taxis. These
services also had none of the overhead of a traditional taxi company as they neither
owned nor insured any vehicles or employed customer service personnel. These services
also refused to comply with any of the regulatory controls that applied to taxicabs.
9.

With these conditions, they quickly built a following of technologically

savvy customers and simultaneously cut into the ridership of taxis as well as the pool of
available drivers that would ordinarily rent taxis. The fast growth and success of these
companies also created a customer momentum that allowed these companies to oppose
efforts by governmental bodies to regulate them.
10.

In 2014, the Montgomery County taxicab industry requested that the

County Legislature reform its taxicab regulatory scheme to create a level playing field for
taxis and these ride sharing companies. In 2015, the Montgomery County Council
reformed its taxicab code, but in so doing, failed to require any regulation of these socalled Transportation Network Companies (TNCs). While the law did make changes
to loosen regulations on taxicabs, it also added new ones preserving the gross regulatory
imbalance between taxis and TNCs. The TNCs now enjoy a regulatory scheme that
favors them and punishes traditional taxi services.

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11.

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The declining market for PVLs necessitated multiple extension of the

repayment deadline under the Fourth Amended Plan. The Fourth Amended Plan
provided for 100% repayment to all unsecured creditors plus interest. The Debtors paid
the creditors 80% of their allowed claims plus interest. However, the market for the sales
of PVLs continued to deteriorate and the difficulty finding drivers who were willing to
rent taxis had a devastating impact on the Debtors operations. Accordingly, the Debtors
were forced to file the instant bankruptcy petitions.
Relief Requested
12.

In order to optimally and economically administer the Debtors pending

Reorganization Cases, by this Motion, the Debtors seek entry of an order pursuant to
Bankruptcy Rule 1015(b), authorizing the joint administration, for procedural purposes
only, with the case number assigned to Blue Star Group, Inc. serving as the lead case.
Basis for Relief
13.

Bankruptcy Rule 1015(b)(4) specifically provides that two or more

bankruptcy petitions filed by a debtor and its affiliates may be consolidated for joint
administration. BSG, Barwood, CTC, City Lease, Fleet Tech and SSTC meet the
definition of affiliates as defined by 101(2) of the Bankruptcy Code in that each are
owned by Transco, Inc., and 100% of the stock in Transco, Inc. is owned by Lee Barnes.
14.

BSG, Barwood, CTC, City Lease, Fleet Tech, and SSTC together and

along with certain non-debtor affiliates, act as an integrated network of transportation

providers. These related entities providing taxi, van and sedan services have overlapping
creditors. The six affiliate entities are completely integrated and rely on each other to
conduct business. Barwood owns 207 Passenger Vehicles Licenses (PVLs), thus

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making it the largest fleet of taxicabs in Montgomery County. BSG is the employer and
paymaster for all of the companys employees. SSTC was acquired from a former
competitor in 1992 which is the holder of 15 PVLs and operates under the Barwood
company logo. CTC, which was acquired from a former competitor in 1993, is the holder
of 75 PVLs and operates under the Barwood company logo. City Lease owns the
equipment used by all of the Debtors in their taxi businesses. Fleet tech operates the
companys maintenance facility used to service the taxi fleet of all the Debtors.
15.

The ability of each of the Debtors to reorganize is dependent upon the

ability of the remaining Debtors to reorganize.

16.

As a result of the integrated nature of the Debtors operations, the Debtors

believe that joint administration of their cases would be in the best interests of their
respective estates. Joint administration of the six cases should result in significantly
reduced administrative expenses and simplify the administration of these cases for all
parties, by reducing the administrative burden of having to file multiple and duplicative
pleadings. Additionally, judicial economy will clearly be served by joint administration.
This Court will be relieved of the burden of entering duplicative orders and maintaining
duplicative files. Finally, supervision of the administrative aspects of the cases by the
Office of the United States Trustee will be simplified.
17.

No party in interest will be prejudiced by the joint administration of these

cases because the Motion requests only administrative, not substantive consolidation of
the estates. For example, any creditor may still file a claim against a particular Debtor or
its estate, or multiple Debtors and their respective estates.

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18.

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Based on the foregoing, the joint administration of the Debtors

bankruptcy proceedings is in the best interests of the Debtors, their creditor and equity
security holders, and all parties in interest.
19.

The Debtors therefore request that these cases be jointly administered for

procedural purposes only. This Motion does not request substantive consolidation.
WHEREFORE, Blue Star Group, Inc., Barwood, Inc., Checker Transportation
Company, Inc., City Lease, Inc., Fleet Tech, Inc., and Silver Spring Transportation
Company request the entry of an Order (i) authorizing the joint administration of the
cases under the case number assigned to Blue Star Group, Inc.; and (ii) granting such
other and further relief as the Court deems just and proper.

Dated: December 20, 2016

/s/ Alan M. Grochal

Alan M. Grochal, Bar No. 01447
Marissa K. Lilja, Bar No. 19004
Tydings & Rosenberg LLP
100 East Pratt Street, 26th Floor
Baltimore, Maryland 21202
agrochal@tydingslaw.com
mlilja@tydingslaw.com
Telephone (410) 752-9700
Counsel for the Debtors

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 20th day of December, 2016, a copy of
the foregoing Emergency Motion for Entry of an Order Pursuant to Rule 1015(b) of the
Federal Rules of Bankruptcy Procedure Directing Joint Administration of the Debtors
Reorganization Cases, proposed Order were served by email on Jordan Spivok, Esquire,
Protas, Spivok & Collins, LLC, 4330 East West Highway, Suite 900, Bethesda, MD
20814-4454; Zvi Guttman, Esquire, the Law Offices of Zvi Guttman, P.A., P.O. Box
32308, Baltimore, Maryland 21282; Fred H.W. Carter, Esquire, Venable LLP, 750 East
Pratt Street, Suite 900, Baltimore, Maryland 21202; Stephen B. Gerald, Esquire,
Whiteford, Taylor & Preston LLP, 7 Saint Paul Street, Suite 1900, Baltimore, Maryland
21202; and the Office of the U.S. Trustee, 6305 Ivy Lane, Suite 600 Greenbelt,
Maryland 20770, and was mailed by overnight delivery, postage prepaid, to the 20 largest
unsecured creditors on the attached list.

/s/ Alan M. Grochal

Alan M. Grochal

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Case 16-26550

Barwood consolidated matrix

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12/19/16

Sheehy Ford
901 N. Frederick Avenue
Gaithersburg, MD 20879

Shulman, Rogers
12505 Park Potomac Avenue
th
6 Floor
Potomac, MD 20854

Area Auto Parts, Inc,

PO Box 387
Dunkirk, MD 20754

Chesapeake Petroleum Supply

PO Box 7610
Gaithersburg, MD 20898

Claims Resource Management

PO Box 20099
Towson, MD 21284

Lucy Han
c/o Kenneth Braunstein, Esquire
200A Montrose Street, Suite 100
Rockville, MD 20850

USAA Insurance
Subrogee of Stephen Sulzer
1100 Superior Avenue, Suite 1850
Cleveland, OH 44114

Mulhern Patterson & Marshall

451 Hungerford Drive
Suite 200
Rockville, MD 20850

Erie Insurance
Subrogee of Gwenn Marley
Wilber & Assoc. PC
201 Landmark Dr.
Normal, IL 61761

Georgian Health
c/o Kevin Goldberg, Esquire
Goldberg & Finnegan
8401 Colesville Road, Suite 630
Silver Spring, MD 20910

Lidia DeVargas
c/o Timothy J. Capurso, Esquire
233 East Redwood St.
Baltimore, MD 21202

Tandem Technologies
32245 Collection Center Dr.
Chicago, IL 60693

Iron Mountain
PO Box 27128
New York, NY 10087

Irma Orellano
c/o Robert Garbo
2730 University Blvd., Suite 604
Silver Spring, MD 20902

The Best Battery Co., Inc.

4015 Fleet Street
Baltimore, MD 21224

Tire World
5702 Industry Lane
Frederick, MD 21704

Meghan Hughes
c/o Larry Burch
7829 Belle Point Drive
Greenbelt, MD 20770

Willys Lovince
c/o Jeffrey Schmieier, Esquire
5405 Twin Knolls Road, Suite 5
Columbia, MD 21045

Washington Employment Guide

PO Box 4832
Trenton, NJ 08650

Photo Communications, Inc.

11730 Parklawn Drive
Rockville, MD 20852

Verizon Cabs
PO Box 4832
Trenton, NJ 08650

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MARYLAND
(Greenbelt Division)
In re:

BLUE STAR GROUP, INC.

Debtor
*

*
*

In re:

BARWOOD, INC.

Debtor
*

*
*

CHECKER TRANSPORTATION COMPANY, *

INC.
Debtor
*

*
*

CITY LEASE, INC.

Debtor

#2740932v.1

Case No.: 16-26550-TJC

(Chapter 11)

Case No.: 16-26552-TJC

(Chapter 11)

In re:

In re:

Case No.: 16-26548-TJC

(Chapter 11)

Case No.: 16-26553-TJC

(Chapter 11)

Case 16-26550

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Filed 12/20/16

In re:

FLEET TECH, INC.

Debtor

In re:

SILVER SPRING TRANSPORTATION

COMPANY

Debtor
*

Page 2 of 4

Case No.: 16-26551-TJC

(Chapter 11)

Case No.: 16-26555-TJC

(Chapter 11)

*
*

ORDER PROVIDING FOR JOINT ADMINISTRATION OF CASES

This matter having come before the Court on an Emergency Motion For Entry Of
An Order Pursuant To Rule 1015(B) of the Federal Rules of Bankruptcy Procedure Directing
Joint Administration of the Debtors Reorganization Cases (the Motion), filed by Blue Star
Group, Inc. (BSG), Barwood, Inc. (Barwood), Checker Transportation Company, Inc. (CTC),
City Lease, Inc. (City Lease), Fleet Tech, Inc. (Fleet Tech), and Silver Spring Transportation
Company (SSTC), Debtors and Debtors-in-Possession, (collectively, the Debtors), and any
opposition thereto, it is, by the United States Bankruptcy Court for the District of Maryland,
ORDERED , that the Motion is GRANTED; and it is further
ORDERED, that the above-captioned cases are hereby jointly administered; and
it is further
ORDERED, that all pleadings, orders, notices and other documents in one or
more of the these chapter 11 cases shall be filed under and entered solely on the docket in the
Blue Star Group, Inc., Case No. 16-26548-TJC; and it is further,

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ORDERED, that the Clerk is further DIRECTED to make a docket entry in each
of the above-captioned cases substantially as follows: An Order has been entered in this case
directing the joint administration of the chapter 11 cases of Blue Star Group, Inc., Barwood, Inc.
(Barwood), Checker Transportation Company, Inc. , City Lease, Inc. , Fleet Tech, Inc., and
Silver Spring Transportation Company, and the docket in Case No. 16-26548-TJC should be
consulted for all matters affecting these cases.
cc

Alan M. Grochal, Esq.

Tydings & Rosenberg LLP
100 East Pratt Street, 26th Floor
Baltimore, MD 21202
Office of the U.S. Trustee
6305 Ivy Lane, Suite 600
Greenbelt, Maryland 20770
Zvi Guttman, Esquire
Law Offices of Zvi Guttman, P.A.
P.O. Box 32308
Baltimore, Maryland 21282
Fred H.W. Carter, Esquire
Venable LLP
750 East Pratt Street, Suite 900
Baltimore, Maryland 21202
Stephen B. Gerald, Esquire
Whiteford, Taylor & Preston LLP
7 Saint Paul Street, Suite 1900
Baltimore, Maryland 21202
Jordan Spivok
Protas, Spivok & Collins, LLC
4330 East West Highway
Suite 900
Bethesda, MD 20814-4454
All creditors on the attached matrix

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12/19/16

Sheehy Ford
901 N. Frederick Avenue
Gaithersburg, MD 20879

Shulman, Rogers
12505 Park Potomac Avenue
th
6 Floor
Potomac, MD 20854

Area Auto Parts, Inc,

PO Box 387
Dunkirk, MD 20754

Chesapeake Petroleum Supply

PO Box 7610
Gaithersburg, MD 20898

Claims Resource Management

PO Box 20099
Towson, MD 21284

Lucy Han
c/o Kenneth Braunstein, Esquire
200A Montrose Street, Suite 100
Rockville, MD 20850

USAA Insurance
Subrogee of Stephen Sulzer
1100 Superior Avenue, Suite 1850
Cleveland, OH 44114

Mulhern Patterson & Marshall

451 Hungerford Drive
Suite 200
Rockville, MD 20850

Erie Insurance
Subrogee of Gwenn Marley
Wilber & Assoc. PC
201 Landmark Dr.
Normal, IL 61761

Georgian Health
c/o Kevin Goldberg, Esquire
Goldberg & Finnegan
8401 Colesville Road, Suite 630
Silver Spring, MD 20910

Lidia DeVargas
c/o Timothy J. Capurso, Esquire
233 East Redwood St.
Baltimore, MD 21202

Tandem Technologies
32245 Collection Center Dr.
Chicago, IL 60693

Iron Mountain
PO Box 27128
New York, NY 10087

Irma Orellano
c/o Robert Garbo
2730 University Blvd., Suite 604
Silver Spring, MD 20902

The Best Battery Co., Inc.

4015 Fleet Street
Baltimore, MD 21224

Tire World
5702 Industry Lane
Frederick, MD 21704

Meghan Hughes
c/o Larry Burch
7829 Belle Point Drive
Greenbelt, MD 20770

Willys Lovince
c/o Jeffrey Schmieier, Esquire
5405 Twin Knolls Road, Suite 5
Columbia, MD 21045

Washington Employment Guide

PO Box 4832
Trenton, NJ 08650

Photo Communications, Inc.

11730 Parklawn Drive
Rockville, MD 20852

Verizon Cabs
PO Box 4832
Trenton, NJ 08650

END OF ORDER

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