Indianapolis-based Celadon Group, Inc., one of the largest truckload carriers in North America, filed for Chapter 11 bankruptcy protection last week. The company failed to satisfy financial covenants with its lenders. When negotiations broke down late last week, management determined bankruptcy was the most prudent way forward.
The company currently owes $33 million to the Justice Department as a result of a federal probe into the company’s accounting practices. Two former executives were indicted last week on charges that they organized a plot to overstate the value of assets related to its leasing business.
Thousands of the company’s drivers found out Sunday night that they were without a job. Many of those drivers were stranded mid-route. It appears that some drivers were asked to deliver loads already in transit, while others were directed to the nearest Celadon depot or truck stop.
Vendors are approaching the situation cautiously. Some drivers reported on social media that their fuel cards had been deactivated, or that truck stops were refusing to provide repairs or roadside assistance, because Celadon’s maintenance accounts had been locked. Still others reported seeing Celadon rigs being repossessed from truck stops. Rival carriers and service providers have spoken out in support of the drivers returning home safely, and quickly getting back on the road.
Analysts expect that the rest of the truckload market will absorb Celadon’s relinquished capacity fairly easily because the industry has a low level of market share concentration. The timing near the holidays adds extra sting to an already difficult situation for Celadon’s former drivers. But, the industry has been wrestling with driver shortages for years, and other carriers are taking the opportunity to add Celadon’s former drivers to their rolls.
Schneider Downs has experts in the transportation and logistics industry, as well as turnaround services, corporate restructuring, and insolvency services. Contact us for more information.
