Barwood Inc., a Kensington taxi company that has been in business since 1964, filed for bankruptcy protection yesterday.
The company, which owns a fleet of 400 vehicles and handles 4,000 trips a day throughout the Washington area, filed a voluntary Chapter 11 petition for reorganization at U.S. Bankruptcy Court in Greenbelt. Barwood Inc. reported assets of $8 million and debts of $7.5 million as of Dec. 31.
Barwood officials blamed the region’s low unemployment rate and strict county license requirements for discouraging potential drivers from working.
“A big part of the problem is that the county has decided to prolong the amount of time it takes to get their licenses renewed, and some of them give up because they can’t afford to wait as long,” said Barwood spokesman Charles Maier.
In order to obtain a taxi driver’s license in Montgomery County, cabdrivers must have good driving records, complete state and federal criminal background checks and pass a driving test administered by the county Department of Public Works and Transportation.
“Sometimes that wait can take up to 90 days,” Mr. Maier said yesterday. “Most can’t wait that long, so they look for other work.”
As a result, the company said it intends to change its business plan to encourage drivers to purchase Barwood’s vehicles.
Barwood drivers now pay a daily fee to rent their vehicles and use Barwood’s dispatch service and facilities, while Barwood assumes the cost of operating and maintaining the fleet.
Barwood officials say the new co-op structure will help the company by increasing its drivers’ commitment to the business.
Lee Barnes, chief executive officer of Barwood, met with more than 100 of his drivers Sunday to tell them about the company’s reorganization plan.
“A co-op would allow you to have a stake in a successful, long-term business for years to come,” Mr. Barnes told the drivers. “As owners of licenses and vehicles, you will realize value and you can have greater value if you continue to work hard to provide our customers with a courteous, safe ride in clean, well-maintained vehicles.”
“If you gravitate to an owner-operator model, it will create a more committed work force,” Mr. Maier said.
Cab companies in Chicago, San Francisco, Los Angeles and Las Vegas operate under this co-op taxi business model.
Barwood has asked Montgomery County to relax its regulations to accommodate the co-op business structure.
“We need to evaluate the effectiveness of what [Barwood] is proposing before we consider any regulation changes,” Montgomery County Executive Isiah “Ike” Leggett said yesterday.
“We favor company ownership over private cab ownership, because we want to offer the best protection structure for customers,” Mr. Leggett said.
He said he plans to meet today with county officials to discuss the effect of Barwood’s proposal.
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