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Executive Strife Plunges Firm Into Bankruptcy

Management: 300 workers are laid off as Santa Ana's Right-O-Way Transportation closes.

February 23, 1996|JOHN O'DELL | TIMES STAFF WRITER

SANTA ANA — A freight forwarding firm with an estimated 300 employees nationally and $33 million in debts has shut down and begun liquidation proceedings in the wake of fierce management infighting.

Right-O-Way Transportation Inc. will reopen soon with a skeleton crew of about 20 workers, but only to provide service to existing clients while its assets are cataloged for sale under a Chapter 7 bankruptcy.

The company, which ultimately will be shuttered entirely, has already has laid off all of its employees, including 25 at the company's Tustin headquarters.

Costa Mesa bankruptcy attorney Theodor Albert, who represents Right-O-Way, said the company shut its doors and filed the liquidation petition last Friday in U.S. Bankruptcy Court in Santa Ana.

A court-appointed trustee, however, received court permission Thursday to reopen the business for 60 days to complete several pending contracts, which would increase cash receipts and improve the value of the company's assets prior to the liquidation. The temporary crew will probably come from the ranks of laid-off employees, and most will work in Tustin, said Leonard Shulman, attorney for the trustee.

Funds from asset sales will be used to pay bankruptcy costs and, if anything is left over, to repay some of Right-O-Way's debts. The company has $14 million in assets, Albert estimated.

Right-O-Way was started in 1979 as a trucking company and expanded into overseas freight forwarding in the late 1980s. Freight forwarders act as middlemen in the shipping process, booking space on cargo carriers--trains, trucks, ships and airplanes--for companies that have goods to move but don't have their own shipping departments.

Right-O-Way, which did about $80 million in business last year, was one of the nation's mid-size forwarders.

"The company probably could have survived if not for the fighting between the executives," said Michael McDonald, former national accounts manager who left Right-O-Way in November to become vice president of sales for competitor Aeronet Worldwide in Costa Mesa.

Right-O-Way's owner and chief executive, New Jersey businessman Eugene Hayes, and company President Harald Niehenke "couldn't agree on anything," Albert said.

Hayes tried to fire Niehenke in June, but the Newport Beach resident won a court order reinstating him. The Delaware court also appointed an overseer to try to mediate the dispute, but by then Right-O-Way's biggest financial backers had pulled out, Albert said.

Neither Hayes nor Niehenke could be reached for comment.

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