RCC Consultants files for Chapter 11 bankruptcy

RCC Consultants, one of the best-known engineering and consulting firms in the critical-communications industry, has filed for Chapter 11 bankruptcy and acknowledges that it owes several million dollars to its 78 employees and other creditors.

Last Friday, RCC Consultants submitted a declaration to the State of New Jersey bankruptcy court seeking bankruptcy relief from “severe liquidity problems” that have resulted in the company failing to meet lease obligations and failing to pay employees and officers more than $2.5 million.

“As of the petition date, employees are owed approximately $1.3 million (consisting of 4½ missed payrolls),” according to a declaration filed by RCC Consultants President and CEO Mike Hunter. “Officers, performing as employees, are owed approximately $1 million (consisting of 10 missed payrolls), and have not been reimbursed for business expenses totaling approximately $250,000.”

Overall, RCC Consultants lists more than 120 creditors with unsecured claims. Of these, the 20 creditors with the largest unsecured claims are owed a total of more than $1.5 million, with American Express having the largest listed claim of $416,224.46.

Noting that "over 90%" of its revenue is generated from critical-infrastructure customers, RCC Consultants cited several issues that have caused the company to seek bankruptcy relief in court documents.

“In sum, tepid economic growth in the United States, financial stress on states and local governments, reduced federal funding for interoperable voice-radio systems, and uncertainty regarding the future course of public-safety communications combined to weaken the market for RCC’s core consulting services,” the RCC Consultants’ filing states.

“Consequently, after a record profitable year in 2012, RCC saw operating losses in 2013 and 2014. Increased competition for a smaller pool of potential business (given the slowdown in land-based mobile communications system investment) was also a major factor.”

Indeed, several companies in the LMR sector have cited a significant slowdown in business after many customers revamped their networks to comply with an FCC mandate to narrowband their VHF/UHF systems by Dec. 31, 2012.

RCC Consultants is pursuing the Chapter 11 bankruptcy process “to effectively reorganize its business operations and affairs, free from the duress and financial pressure associated with litigation and other creditor actions,” according to Hunter’s declaration.

“Through its Chapter 11 filing, RCC seeks to ensure stability, along with an opportunity to reorganize and reclaim profitability, while still attempting to work with all of its creditors for the mutual benefit of all involved,” the filing states. “Given its history of innovation and success, RCC is confident that it will be able to achieve these ends. RCC is also confident that it will emerge from this process reorganized as a more vibrant and robust company.”

This optimism is founded in RCC Consultants’ claim that it has “over $10 million in ‘shovel-ready’ projects, as well as approximately 150 ongoing contracts,” Hunter’s declaration states. “RCC estimates that it will generate a profit margin of approximately 15-20% in connection with such contracts, and that additional work will be requested following the completion of same.”