Celadon, biggest bankruptcy in truckload history expected by mid-week
Celadon Group will file for bankruptcy protection under Chapter 11 no later than Wednesday, December 11, according to internal sources. The Indianapolis-based, publicly-traded trucking carrier employed more than 3,200 drivers and took in more than $1 billion in gross revenue as recently as 2015.
More recent numbers are difficult to come by because Celadon had to restate its financial reporting after mismanagement and a complex accounting scandal that ultimately resulted in former executives being indicted on securities fraud charges yesterday, December 5.
But the imminent bankruptcy’s immediate cause was a technical default on Celadon’s covenants, the agreements between borrowers and lenders that can define requirements for cash reserves and earnings. Celadon entered the week with scant cash in its accounts to continue operations, but was negotiating with creditors Luminis and Blue Torch to secure further financing. Those talks fell through Thursday morning, December 4, when talks between Blue Torch and Luminis broke down over collateral issues. Blue Torch owned 70% of the debt and Luminus owned 30%.
Over-the-road drivers may be at risk of being stranded — our source could not verify that Celadon’s drivers would get home — and should fill their tanks at the earliest opportunity as the company’s fuel cards still work. Celadon’s 3,500 employees could lose their jobs soon.
https://www.freightwaves.com/news/celadon-biggest-bankruptcy-in-truckload-history-expected-by-mid-week
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