Omega Files For Bankruptcy Protection -- 76 Laid Off As Company Reorganizes

Omega America, a troubled Bothell-based company that cleans up storage tanks at gas stations, yesterday said it filed a bankruptcy petition to protect itself from creditors as it seeks to restructure its operations.

Omega's management told its 76 workers in Seattle to file for unemployment insurance, according to several employees.

An official at the company said he had been instructed not to comment on any possible layoffs, and referred queries to the chief executive officer, Louis Tedesco, who did not return calls.

But the company issued a statement saying it had petitioned for protection and reorganization under Chapter 11 of the U.S. Bankruptcy Code. Its petition was filed in the U.S. Bankruptcy Court for the Western District of Washington.

In its statement, Omega said its tangible assets exceeded its liabilities by more than $20 million, but it was seeking bankruptcy protection to ensure adequate cash flow. The company said it was negotiating with lenders to obtain new financing.

The news comes five months after the company, formerly known as Omega Environmental, posted losses of $12.6 million, or 28 cents a share, on sales of $41 million during the three months ending Dec. 31. That compared to a loss of $1.8 million on sales of $40 million for the same period a year earlier.

Omega lost $21 million on sales of $151 million for its 1996 fiscal year, which ended March 31.

Last Friday morning, employees at Omega's office in Seattle were gathered together and told they could work the rest of the day, or go home, said Susan Willis, who worked in the accounting department.

"They've kept us in the dark," said Willis. "There's quite a few disgruntled employees."

The day before, Neil Calkins, another Omega employee, was given a pink slip.

"It was pretty surprising," he said. "I came back from vacation and found out I didn't have a job."

Omega has more than 1,000 employees in the U.S. and Mexico. Besides fixing underground storage tanks, the company also builds and repairs fueling systems for oil companies.

The layoffs are the latest chapter in Omega's checkered history.

In 1994, a shareholder lawsuit alleged that executives had inflated the company's stock price by exaggerating how close it was to obtaining contracts to install underground tanks for three unnamed convenience store chains in seven states. Omega contended that the contracts were worth $60 million.

The suit also alleged that then-chairman David Kravitz failed to tell investors that, while he was president of HOH Water Technology, both he and HOH were investigated by the Securities and Exchange Commission for "orchestrating sham deals."

The lawsuit was settled a year later for $5.6 million, and the company admitted no wrongdoing.

In April of last year, Leo Azure replaced Kravitz as the company's chairman. Since then, SEC records show Azure has sold 618,000 shares of Omega stock.

The company's stock slipped in the last year from about $3 a share to around 75 cents, and is no longer listed on the Nasdaq.

For attorney Steve Toll, news of the company's reshuffling and sinking stock price is an especially bitter pill.

Toll was the attorney who represented the shareholders in their 1994 lawsuit. Because the company didn't have any money to pay legal bills, Toll received stock instead. At the company's annual meeting last year, Toll was so impressed he bought more.

With the stock now trading at less than a dollar a share, Toll has seen he investment, and his payment, dwindle.

"Our fee went out the window," he said. "It's very disappointing."