Roger R. Blunt, head of one of the nation's largest black-owned construction firms, announced his resignation yesterday as president-elect of the Metropolitan Washington Board of Trade, three days after his firm filed for bankruptcy.
Blunt, president of Blunt Enterprises Inc., would have become president of the Board of Trade, Washington's equivalent of a chamber of commerce, in January. However, he said yesterday that he decided to step down from the position in order to devote full time to his business -- a decision which caught officials at the Board of Trade by surprise.
Luther H. Hodges Jr., chairman of the National Bank of Washington and currently vice president, is next in line to become president of the board, a 1,400-member organization that is influential in lobbying on business matters in all three metropolitan jurisdictions.
Blunt, who would have been the first black president of the board, said it "seems only fair that I be realistic in recognizing where my time ought to be spent. . . . It is a disappointment. On the other hand, I don't see why I should not be a candidate at a future date, if the board will have me."
Blunt said he has been working to solve the financial problems of his firm for nearly two years, but problems with the Internal Revenue Service over payment of back taxes caused his company to file for protection under Chapter 11 of the federal bankruptcy code last Friday, according to Blunt and his attorney. Blunt's attorney, Roger Frankel, said the company has debts totalling about $2.3 million.
Of this, about $500,000 in payroll taxes are owed to the IRS, which had informed Blunt Enterprises that it would begin seizing company assets this week if the debt were not paid, he said.
"They were not in a position to pay off the taxes. If they had not filed the [bankruptcy] petition, the IRS would have conceivably shut down the business," Frankel said. Blunt Enterprises' other major creditors are the National Bank of Washington, which is owed $1.3 million, and the Fidelity and Deposit Co. of Maryland, which is owed about $300,000, according to Frankel
For his own part, Blunt declined to discuss in detail the financial problems of his company, although Frankel said they stemmed in part from a recent decision to move out of the asphalt-subcontracting business into general contracting. "Getting that off the ground, which basically requires a lot of capital, was where a lot of the problems were," said the attorney.
Frankel also said that, as a result of a perception of financial weakness, the construction company has had problems recently obtaining the bonding usually required before a contractor is awarded a contract.
Despite the problems, Frankel and Blunt expressed optimism that the company will be able to weather the current storm and stressed that the company's construction subsidiaries will continue to operate. Frankel said that, under bankrupcty law, a company is allowed to stretch out payments on federal taxes over six years, while the other debts mostly represent "ordinary-course expenses that will get paid."
Blunt added, "This isn't folding up and closing my doors. This is a reorganization, which is quite common."
National Bank's Hodges and Julia M. Walsh, the outgoing president of the board, said they were told of Blunt's decision to step down at a meeting of the board's executive committee yesterday morning. They said it was a surprise.
"I was terribly dissappointed," said Walsh. "It's a business decision for him. He realized he couldn't do everything." Walsh credited Blunt with playing an instrumental role in the board's work on recommending workers' compensation rates for the District.