FIRST LOOK: Inside Celadon’s Nearly $400 MILLION “Bloodbath” Bankruptcy
Indianapolis, IN – Shortly after midnight on Monday, December 9, Celadon Group Inc. formally announced it had filed bankruptcy in U.S. Bankruptcy Court for the District of Delaware and will be ceasing all operations.
Transportation Nation Network (TNN) was the first and only news outlet in the world to accurately report the mega carrier would be filing for Chapter 11 protections “as close to midnight as possible” on Sunday, December 8, and cease operations the following day.
Now, we are getting our first look inside the largest truckload carrier bankruptcy in U.S. history.
One former high ranking Celadon executive, who spoke to TNN on Monday, described the trucking giant’s nearly $400 million bankruptcy filing as a “bloodbath.”
Celadon Group’s filing of Chapter 11 bankruptcy relief includes its 25 affiliate entities, which are listed below:
• A R Management Services, Inc.
• Bee Line, Inc.
• Celadon Canadian Holdings, Limited
• Celadon E-Commerce, Inc.
• Celadon Group, Inc.
• Celadon International Corporation
• Celadon Logistics Services, Inc.
• Celadon Realty, LLC
• Celadon Trucking Services, Inc.
• Celadona Mexicana, S.A. DE C.V.
• Distribution, Inc. (d.b.a FTL)
• Eagle Logistics Services, Inc.
• Hyndman Transport Limited
• Jaguar Logistics, S.A. DE C.V.
• Leasing Servicios, S.A. DE C.V.
• Osborn Transportation, Inc.
• Quality Companies, LLC
• Quality Equipment Leasing, LLC
• Quality Insurance, LLC
• Servicios Corporativos Jaguar, S.C.
• Servicios de Transportacion Jaguar, S.A. DE C.V.
• Stinger Logistics, Inc.
• Strategic Leasing, Inc.
• Taylor Express, Inc.
• Transportation Insurance Services Risk Retention Group, Inc.
• Vorbas, LLC
According to court documents, Celadon reported a total of approximately $421 million in assets and $391 million in debts as of December 2, 2019.
The filing also reports 29,092,653 shares of common stock owned by approximately 171 holders.
Celadon reported a list of its top 50 creditors with unsecured claims.
The largest creditor is the United States Department of Justice (DOJ).
Celadon owes the DOJ $33,000,000 stemming from a settlement announced earlier this year in which the company agreed to pay restitution of $42,245,302 after it was discovered the company had reported fraudulent financial statements dating back to fiscal year 2016.
Three former Celadon executives, William Eric Meek, 39; Bobby Lee Peavler, 40; and Danny Williams, 36; have been arrested and charged with multiple crimes in connection to what DOJ officials called a “complex securities and accounting fraud scheme that resulted in a loss of more than $60 million in shareholder value.”
The second largest creditor is Ensley, AL-based TA Dispatch, LLC.
TA Dispatch is owed $4,676,261.37, according to the filing.
In April of this year, Celadon sold its logistics division to TA Dispatch, operating as TA Services, Inc., a PS Logistics, LLC subsidiary.
The company is a full-service provider of asset-based transportation, brokerage, 3PL, and supply chain services.
MORE CELADON NEWS
Comdata, a payment processor and issuer of fleet fuel cards, is third on the list and owed $2,800,000 followed by Pilot Travel Centers at $2,500,000, which Celadon had a corporate fueling account with.
As for equipment debt, Celadon reports it owes Chattanooga, TN-based Transportation Enterprise Leasing (TEL) a total of $2,038,723.00.
The Goodyear Tire & Rubber Company is owed $1,261,824.15, according to court documents.
It’s road maintenance provider, Master Fleet National, LLC, is owed $734,939.30.
As is the case for all carriers, keeping the trucks full is a top priority.
Records reflect Celadon’s driver recruitment ad agency, Chattanooga, TN-based The Johnson Group LLC. is owed $431,157.37 for unpaid services.
Will Employees Get Paid?
The next hearing is in U.S. Bankruptcy Court for the District of Delaware and is scheduled for Tuesday, December 10 at 2 p.m.
According to a noted corporate bankruptcy attorney who spoke with TNN after reviewing Celadon’s filing, the hearing tomorrow is to “lock in exactly what happens on the case.”
Of particular interest to Celadon employees will be the court’s ruling on Docket 9, which TNN’s bankruptcy expert says the court is likely to enter an “interim order.”
This critical motion is the Motion to Pay Employee Wages.
This is one indication Celadon intends to pay it’s employees, TNN’s bankruptcy expert says.
However, he explained that a court order is needed because this likely means a lender has put in new money to protect its assets and demands such an order to “ensure being first to be repaid.”
In its filing, Celadon estimates it owes more than $4,400,000 in unpaid compensation to employees and independent contractors.
Further, the company says it owes another $1,000,000 in obligations as part of its “termination bonus program.”
According to multiple sources with direct knowledge of the situation, Celadon representatives have assured employees that work completed through Wednesday will be paid as normal this Friday.
Employees, including drivers, have been told that so long as they comply with management’s orders, which include making final customer deliveries and returning trucks to the appropriate terminals or leasing company, they will receive the compensation owed to them.
According to a Celadon insider, the company is offering, and so far, purchased dozens and dozens of bus tickets home for drivers and will continue to do so for each driver who safely returns his truck as directed.
While there has been conflicting reports about whether fuel cards are operational, multiple Celadon drivers still under a load and who spoke with TNN on the condition of anonymity, informed that their fuel cards remain operational.
Make sure to stay logged on to TransportationNation.com or follow us on social media as we will be bringing you the latest on tomorrow’s court ruling and much more.