Judge Approves Celadon’s Plan to Pay MILLIONS in Wages Owed to Drivers
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Indianapolis, IN – Celadon Group has received authorization by U.S. Bankruptcy Court for the District of Delaware to pay more than $5,000,000 the company says it owes to employees and independent contractors.
On Tuesday afternoon, United States Bankruptcy Judge Karen B. Owens approved a motion filed by Celadon Group, as part of its Chapter 11 bankruptcy case, authorizing the company to pay $5,443,000 in workforce obligations.
A noted corporate bankruptcy attorney advising Transportation Nation Network (TNN) on Celadon’s case indicated the carrier is required by law to seek court approval to pay its workforce obligations.
At the time the mega carrier filed for bankruptcy it reported $3,900,000 in unpaid compensation to employees, $528,000 to independent contractors, and $1,015,000 as part of its termination bonus program.
Celadon’s Senior Vice President of Finance, Kathryn Wouters, argued that employees and independent contractors would “suffer” further “personal hardship” if the court did not authorize the carrier to provide the compensation it owes.
“Because the vast majority of employees rely in large part, if not exclusively, on their compensation and benefits to pay their daily living expenses and support their families, these employees and their families will be exposed to significant financial constraints if [Celadon is] not permitted to pay accrued and owed, pre-petition compensation,” Wouters said.
Further, Wouters argued that since Celadon’s drivers are “critically important to effectuate an orderly wind down of the business and to avoid stranding the Celadons’ assets and its customers’ cargo throughout North America,” it is “critical” they be compensated.
Judge Owens agreed and entered an interim order allowing for the payments to be made.
However, Judge Owens’ order does not direct the carrier to make the payments.
“The Debtors are authorized, but not directed, to pay and/or honor in their sole discretion, the Pre-petition Workforce Obligations, subject to an aggregate maximum during the interim period of $5,443,000…” Judge Owens’ order states.
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On Monday, TNN reported that 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, December 13.
Employees, including drivers, have been assured 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.
Where Is The Money To Pay Workers Going To Come From?
Also as part of Celadon’s bankruptcy case, the carrier has reached an up to $9,050,000 financing agreement with Blue Torch Finance.
Celadon filed a motion asking Judge Owens to approve the agreement which includes a budgeted plan to pay the wages owed to terminated workers, as well those still employed by the company.
In that motion, Wouters argued, “post-petition financing is necessary to allow [Celadon] to wind down in an orderly fashion under chapter 11, thereby preserving value and avoiding the irreparable harm that would result from a chapter 7 liquidation process.”
Judge Owens once again agreed and approved the financing deal.
Based on these developments, TNN’s bankruptcy expert says it is “likely” workers will be compensated.
TransportationNation.com will continue to follow new developments in the case.