American Freight Systems files for bankruptcy; 700 here idled

American Freight Systems, a trucking company that operatedterminals in Chicago and Palatine, filed for bankruptcy Tuesday andclosed down operations, leaving about 700 Chicago area truckersunemployed.

American Freight is owned by American Carriers Inc. of OverlandPark, Kan. American Carriers put American Freight, which operates inthe Midwest, and another subsidiary, USA Western, which operates onthe West Coast, into Chapter 11 bankruptcy reorganization after itsbank credit was canceled Monday, the company said in a statement.

Both companies were shut down Monday night, leaving 6,000workers unemployed nationwide. American Carriers said it has noplans to resume operations at the two companies. No executives wereavailable to comment beyond the statement released by the company.

American Freight operated facilities at 3000 W. 36th on thecity's Southwest Side and at 750 N. Hicks Rd. in Palatine.

The company's stock, which has traded as high as $10 in the lastyear, closed Tuesday at $1.67 1/2 per share. More than 1 million ofthe company's 7.5 million outstanding shares changed hands Wednesday.

American Carriers blamed heavy operating losses at AmericanFreight for the bankruptcy filing.

A man answering the phone at the Palatine terminal and aninvestor who tried to take over American Carriers, however, blamed afailed acquisition for draining the company's reserves. Late lastyear, American Carriers bought Smith Transfer, which operates on theEast Coast, for 1.5 million shares of newly issued stock. The dealresulted in "gigantic losses," said Christopher A. Jansen, presidentof Baytree Investors, a Chicago investment firm.

Baytree has been negotiating since February to take overAmerican Carriers in a $56 million leveraged buyout, Jansen said.Negotiations were unsuccessful because American Carriers "said theoffer wasn't high enough and they were doing so wonderfully. But youdon't file (Chapter) 11 when things are good," he said.

Baytree led the leveraged buyout of Wieboldt Stores in 1986 thatultimately led the retailer into bankruptcy and out of business.

The man who answered the phone at the Palatine terminal saidAmerican Freight was a victim of the Smith acquisition, computerproblems and industry competition. "We were very solvent up to themerger with Smith. We lost our butt then," he said.