We Care Transportation, the Buffalo company that provides transportation to 5,000 area residents each day, blamed soaring fuel costs and rising insurance expenses as it filed to reorganize its business under bankruptcy court protection.
"It's been a struggle for the last year," said Lisa Arnet, We Care's general manager.
The company's insurance costs have quadrupled over the last four years, while We Care also was hit hard as soaring fuel prices drove up what already was its largest non-employee expense, Arnet said.
The company, which employs 348 workers, continues to operate under bankruptcy protection with no reduction in services, Arnet said. "We are hoping for a very quick turnaround," she said.
We Care is the biggest provider of transportation to mentally handicapped adults, giving rides to 2,000 special needs customers each day.
The jump in fuel costs hit We Care particularly hard because many of its services are covered by government agencies under one-year contracts that carry fixed prices. So when fuel prices soared, We Care was forced to absorb all of the increase.
"No one could have guessed that fuel costs would have gone up so much," Arnet said, noting that the spike after Hurricane Katrinia hit late last month was the final straw.
"We were already struggling and our local fuel people were trying to work with us, but when this last increase came, it was just too much."
We Care listed $2.1 million in debts among its 20 biggest creditors, including $928,085 owed to the Internal Revenue Service, in its Chapter 11 filing.
U.S. Bankruptcy Court Judge Carl L. Bucki has approved a motion allowing the company to meet its payroll for work that its employees did before the bankruptcy filing.
Bucki also gave the company permission to tap those assets to help meet its estimated $1.1 million in operating expenses in the coming weeks. Those assets, which total $2.9 million, are secured as collateral against $1.7 million that We Care owes to a Detroit-based investment firm, Peninsula Fund III Limited Partnership. Bucki's order gave We Care permission to tap those assets that are in excess of Peninsula's claim.
Peninsula's $4 million loan helped keep We Care from filing for bankruptcy three years ago, when high insurance rates, a drop in leisure and corporate travel, and the impact of a weeklong winter storm in December 2001 threatened the company.
We Care was founded by John Arnet in 1984 in West Seneca, and later moved to East Amherst Street in Buffalo. In addition to providing transportation to special needs customers, We Care also carries thousands of people each day on medical trips to hospitals, nursing homes and dialysis providers, as well as offering school bus transportation, tours and transportation for senior citizens and church groups.