Red River Waste Solutions plans to continue its usual day-to-day operations as it reorganizes through bankruptcy.
Red River, Fort Wayne's contracted trash hauler, filed Chapter 11 bankruptcy Oct. 14 through a federal court in Texas, where the company is based. Red River is now protected by bankruptcy law and can either continue to provide trash service itself or assign the contract to another company.
Jim Calandra, Red River's chief restructuring officer, said in a statement that Red River intends for its day-to-day operations “to continue as usual.”
Red River, which Calandra said is an integral part of the communities it serves, was adversely affected by the COVID-19 pandemic and its related challenges.
“These challenges include a historic labor shortage and a pandemic-driven increase in waste volumes,” the statement said.
“These factors have significantly increased our labor costs, the stress on our great employees, and our rolling stock, all resulting in challenges with our current lender, even though we have maintained our excellent customer service levels required by our customers.”
The city awarded Red River a seven-year contract in 2017. Within three months of the contract taking effect in 2018, Fort Wayne City Council members raised concerns about missed trash collections, an issue that has surfaced numerous times since then.
A presentation from the Solid Waste Department and Red River was listed for the City Council meeting Tuesday. Tim Haffner, the city's corporate attorney, said Red River officials met with him before the meeting but were unable to attend because of a scheduling conflict.
Haffner and Jay Jaffe of Faegre Drinker Biddle & Reath LLP explained the possible options Red River now faces in bankruptcy.
Red River can reorganize the company on a stand-alone basis, which would likely involve an infusion of funding or equity. Or it can also decide to instead sell its assets to someone with better capital who can operate the business. The third option involves a hybrid of the first two options, such as selling some assets and reorganizing with the remaining assets.
Deadlines in bankruptcy hearings are typically set for 120 days, but Jaffe said there are often many extensions. The hard deadline is for the bankrupt company to have reorganization plans filed in 18 months.
“Red River Waste Solutions expects to use this chapter 11 bankruptcy to reorganize its debts, eliminating legacy debt, providing the company with necessary liquidity and a strengthened balance sheet, and preserving/improving its ability to serve its customers,” the statement said.
“While Red River moves through the restructuring process as quickly as possible, it intends for its day-to-day operations, engagement with customers, and top-notch service to continue as usual.”