Thirty-three Baltimore taxicab permits were auctioned off yesterday after the companies that held them defaulted on loan payments.
Nine cab companies, all members of the Royal Taxicab Association Inc., had put up their combined 90 permits as collateral for a financing agreement. When they didn't make payments on time, the financier, Medallion Funding Corp. in New York, repossessed the permits.
In an auction on Jan. 13, 45 permits were sold. Forty-five more were available yesterday, but 12 were not purchased and will be offered again Feb. 2.
Just as the bidding began yesterday at Alex Cooper Auctioneers Inc. in Towson, a lawyer who represented the nine companies stood to protest the proceedings.
"I object to the sale of more than 15 [permits]," Gilbert Rosenthal announced. "The 45 that you previously sold and 15 more are more than ample to pay off our creditors."
The bidding began despite his concerns.
Rosenthal said later that the nine companies owed Medallion about $630,000, and that with minimum required bids of $12,500 each, there was no need to sell all the permits.
The nine companies are all owned in part by Rosenthal and Daniel H. Setzer. Setzer was also head of Royal Taxicab, which is insolvent.
Setzer was out of town and unavailable for comment.
Cab drivers in Maryland must belong to an association, such as Royal or Yellow Cab. The associations provide benefits such as dispatchers and a recognizable name brand.
"All Medallion wants is what it's properly owed," Lee Klavans, the attorney handling the auction for the funding company, said after the bidding was over. "They do not want anything more than they are entitled to."
He said all 90 permits had to be sold to cover Medallion's costs, including interest. Each permit has to be approved by the state Public Service Commission, he noted, and some permits -- or medallions as they are called -- might be returned to the financier.
If the nine companies have a problem with that, Klavans said, they will have to take the matter to court -- something Rosenthal said he may do.
Fourteen individual permits were auctioned yesterday, most going for $12,500 or $12,600. The highest price was $12,800.
19 to one buyer
A batch of 19 permits sold for $12,500 each, or $237,500. The buyer was National Transportation Inc., a member of the Yellow Cab Association.
Kevin Gill, National's vice president, said he also purchased 38 permits in last week's auction. The company has 350 cabs, all driven by independent operators.
Gill, who owns the company with his brother, Kuljit, said drivers can buy taxis from his company at the same cost National paid for them, with no interest payments. The Gills' profits come from selling insurance to the drivers through their Insurance Corporation of New York, he said.
Gill said he also gets financing through Medallion, but he's not afraid that some day it will be his permits on the auction block.
"If you pay your bills on time, there's no problem," he said.
Number of permits limited
Gill said that because there is a limited number of permits available in the city -- 1,151 -- they are a valuable commodity.
"People grab as much as they can," he said.
Although no one was willing to buy the remaining 12 permits for $12,500 yesterday, some people asked if Medallion would accept bids below that minimum. Klavans declined. "That's what the market price is," he said.