A Brooklyn taxi operator who got his first medallion in the 1970s has filed for bankruptcy as the coronavirus ravages an already struggling industry, The Post has learned.
Joe Pross, who started driving a taxi in 1975 and now runs a fleet of 42 cabs, filed for Chapter 11 bankruptcy protection for his Crown Heights-based medallion company, Walker Service Corp., on March 27, court papers show.
Pross, 75, declined to be interviewed for this story. But his Brooklyn federal court bankruptcy filings underscore how vulnerable taxi operators were prior to the coronavirus crippling tourism and forcing thousands of New Yorkers inside.
Walker Service Corp. appears to be the first medallion owner to file for bankruptcy protection since the pandemic shut down the city, but it’s not likely the last, industry experts say.
“This industry was on the brink before this happened, and this virus has just pushed it totally over the edge,” said Matthew Daus, a former TLC commissioner who’s now a lawyer with Windels Marx. “I hope we don’t see more bankruptcies, but I’m afraid a lot of people might go under and file for bankruptcy protection. This will be worse than 9/11 economically, especially for the black cars and luxury livery.”
In an affidavit filed with his bankruptcy papers, Pross says his medallions — “once worth millions” — plummeted in value as ride-hailing apps and Uber and Lyft grew in popularity, leaving him and his wife struggling to pay off loans they took out on their medallions to build the business.
By 2019, before the coronavirus even hit, Pross’ fleet was pulling in $29,400 a month — far short of the $105,610 a month he needed to repay $18.7 million in medallion loans, court papers show.
In late February, his lender, Virginia-based Pentagon Federal Credit Union, issued notices of default on six loans and demanded $158,186 within 30 days to rectify the situation.
Pross says he tried to negotiate repayment. Then the coronavirus hit — slamming the brakes on taxi revenue even as drivers and operators continue to face expenses for parking, dispatchers, mechanics and administrative workers.
“The current COVID-19 pandemic has now rendered the debtors with virtually no income to operate its businesses as the debtors have recently suspended operations during the COVID-19 pandemic for March, April and possibly May 2020,” Pross’ filing says.
As The Post reported on March 15 — before Gov. Cuomo even ordered restaurants shut down and non-essential workers stay home — taxi drivers were making as little as $50 a week as people afraid of contagion avoided public spaces.
“The drivers are coming back asking if I can pay their gas because their fares didn’t even cover it. We can’t go on like this,” a taxi operator who asked not to be named told The Post on Wednesday.
Pross’s affidavit also blames Walker’s debt holder, PenFed, saying it has been playing hardball by “shockingly” refusing to extend its 30-day payment deadline.
PenFed acquired $290 million worth of medallion loans, including Pross’s, as part of its 2019 merger with New York-based Progressive Credit Union, according to reports at the time.
The credit union declined to comment on how many medallion loans it currently possesses, but insisted its working hard to keep taxi operators in business.
The credit union declined to comment on how many medallion loans it currently possess, but insisted it’s working hard to keep taxi operators in business.
“PenFed actively works with our members experiencing financial hardships, including taxi medallion borrowers who have requested relief,” a PenFed spokesperson said in a statement. “PenFed has an extensive team in New York working to help members who need assistance during this challenging time.”
Pross is hoping to come out of bankruptcy with reduced loans so he can continue to run the business through his main business, Utica Taxi, which operates the cars and garages and employs the dispatchers and other workers, filings show.
But with coronavirus deaths in New York nearing 2,000 and growing, the main business also faces the threat of going under.
“The proliferation of ride-sharing apps such as Uber and Lyft … combined with the economic devastation associated with the COVID-19 pandemic, may eventually render Utica Taxi bankrupt as well,” Pross’ affidavit said.