Celadon Group Filed for Chapter 11 Bankruptcy
By: Dean A. Langdon
Celadon Group, a trucking company based in Indianapolis, Indiana, filed a chapter 11 bankruptcy in Delaware on Monday, December 9th. Celadon has almost 2,700 trucks in the United States, Canada and Mexico, and furthermore employs almost 2,900 drivers and owner-operators. The filing appears to be the largest trucking bankruptcy in history. Although Celadon has been struggling since the discovery of incorrect financial reports in 2017, it brought in new leaders to help turn the company around. It appears those efforts have failed and the company could end up stranding drivers and trucks across North America. In any event, the filing will leave thousands of drivers and administrative staff unemployed just two weeks before the holiday season.
The Impacts of Filing
Consequently, the filing will have substantial impacts on multiple creditors and businesses. Most trucking companies operate with fuel cards. Fuel cards are a form of credit which can be frozen or “turned off” at any time. When this happens, it is difficult to complete delivery of loads or get drivers and vehicles back to a terminal. In addition to this, others impacted include lenders and lessors for tractors and trailers. They will be faced with the logistics of recovering and liquidating thousands of vehicles. In addition, customers who were relying on Celadon to ship or deliver goods must now scramble for alternate carriers to provide such services. The ripple effect of this filing will be substantial. Celadon apparently served a large number of automotive clients as well. With so many factories operating on a “just-in-time” delivery systems, we could see auto suppliers and manufacturers close plants until things are sorted out.
While it appears most of the assets of Celadon will be liquidated, two operating companies – Taylor Express and Jaguar Transportation – will continue operating and offered for sale as going concerns. This will provide relief for some employees and customers, and may provide a buyer with the potential to acquire and grow a trucking business. However, it has been a tough year for the trucking industry and this bankruptcy will also reduce some of the excess capacity in that industry.
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