Barwood Taxi Company Files for Bankruptcy
Company has largest fleet of taxicabs in Montgomery County
Bethesda Beat file photo - Aaron Kraut
Barwood Inc. and its affiliated taxi companies filed for Chapter 11 bankruptcy protection in federal court Tuesday, citing declining revenues that resulted from ride-sharing companies such as Uber and Lyft operating in Montgomery County.
In court filings, the company said it operates a fleet of 457 vehicles that “constitute the largest fleet of taxicabs in Montgomery County.” Barwood noted its revenues were approximately $7.1 million in 2015 and $3.3 million during the first seven and a half months of 2016. It said it had about $4.5 million in assets and $5.4 million in liabilities.
“We’re going to reorganize, restructure and remain in business,” Lisa Merdoc, Barwood’s corporate communications and quality assurance manager, told Bethesda Beat Wednesday.
This is the second time in 10 years the company has filed for bankruptcy, with the other filing coming in 2007. However, the company says market factors have changed this time. According to court filings, Barwood funded its reorganization after the 2007 bankruptcy by selling Personal Vehicle Licenses (PVLs), which can be used by owners to operate a taxi in the county. Barwood said the market for PVLs has depressed dramatically since the entrance of Uber and Lyft in recent years. Currently, the company holds 207 PVLs, according to the filing. which was filed in U.S. Bankruptcy Court in Greenbelt.
The bankruptcy filings also note that Uber and Lyft were able to operate in the county for many years without complying with county and state regulations, “allowing them to offer fares that were substantially lower than the regulated prices of taxis.”
“With these conditions, they quickly built a following of technologically savvy customers and simultaneously cut into the ridership of taxis as well as the pool of available drivers that would ordinarily rent taxis,” the filing says.
Barwood’s filing also puts blame on the Montgomery County Council for failing to regulate Uber, Lyft and other ridesharing companies when the council reformed the county’s taxicab code in 2015. “The [ride-sharing companies] now enjoy a regulatory scheme that favors them and punishes traditional taxi services,” the filing said.
When the council passed the law in July 2015, council members said it was intended to help local taxi drivers compete against the likes of Uber and Lyft by giving more individual drivers the right to purchase PVLs. The state’s General Assembly passed its own regulations for Uber and Lyft earlier in 2015, preempting the county from regulating the ride-sharing services.
"Any time you create a government-franchised monopoly, monopolies are not well equipped to handle innovative new entrants," council President Roger Berliner said.
"They want people to stick with a rotary phone in a digital world," council member Hans Riemer said.
Barwood stated it has 57 employees. Taxi drivers who rent cabs from the company are not considered employees.
Barwood was founded in 1964 by Henry Woodfield and Harry Barnes with 45 taxis, but grew over the past 50 years. It’s now led by President Lee Barnes. Barnes was not immediately available for comment Wednesday afternoon.
During the council’s debate over the taxi code, Barnes tried to fight for stricter regulation of the ride-sharing companies.
“I think the taxi industry—fleets, individual owners and drivers—is worse off,” Barnes said shortly after the bill passed in mid-2015. “The council hasn’t done anything to make the industry more competitive. Uber is more successful not just because it has the app, but because it has [billions] to take on anybody. It’s a corporate bully.”
With reporting by Doug Tallman