May 3, 2012
By: John Clark
A California-based traffic safety company that provides barricades, signs, and lighting for traffic control uses has filed for Chapter 11 bankruptcy reorganization, according to a recent report from the Orange County Register.
Given that the company offers services for state and local governments, and that the state of California is experiencing a budget crisis of unprecedented proportions, it’s not particularly surprising that Newport Beach’s Traffic Control and Safety Corp. is seeking bankruptcy protection.
The young company, which was formed in 2007, consists of six different businesses with 16 locations in both California and Hawaii. The businesses include: Safety Systems Hawaii, Statewide Safety & Signs, Toomey Industries, Traffic Solutions, American Barricade and Flash Safety.
Sources say that the company rents traffic control products and provides various safety services at both the state and municipal levels. And in 2007, the business climate in California seemed relatively healthy, as the bottom had not yet fallen out of the home mortgage market, and the state’s budget remained closely aligned with its spending habits.
One year later, however, when financial markets crashed across the country, California was struck particularly hard, and the state is still reeling from the recession. Now billions of dollars in debt, California is struggling to pay its own employees and fund its own schools, much less help support new traffic companies looking to make their way in a barren economic landscape.
Sources indicate that Traffic Control and Safety Corp. is, like many companies, incorporated in business-friendly Delaware, so it is filing bankruptcy in U.S. Bankruptcy Court in Delaware.
In its filing, the company listed assets between $10 million and $100 million. The group’s largest unsecured creditors include Fifth Street Capital in New York and Marwit Capital in Newport Beach.
Both of these entities are owed roughly $5 million by the struggling traffic safety group. On its website, Fifth Street Capital describes the fledgling company’s subsidiaries as groups that "sell, rent, and service traffic control equipment and personal safety products, provide safety training seminars, and design and implement traffic control plans."
Since there will always be a demand for traffic safety operatives, it is likely that a market will still remain if the company can survive its bankruptcy filing.
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