Not sure if this should go here or the Economy Thread. Actually, it looks like Celadon's story is partly about the economy, but also fraud. I'm not sure if they were cooking the books to keep the company going or for personal gain or both.
Celadon is one of the shady entry level train companies and I've heard drivers call them Sell A Con.
This is a very awkward situation once again though for drivers who may face being stranded by shutoff fuel cars and being in trucks with an inactive DOT# authority.
More at link:
The billion-dollar truckload carrier's failure is one of the largest in industry history.
www.freightwaves.com
Celadon, biggest bankruptcy in truckload history expected by mid-week:
Short seller’s report calling the company “A House of Cards” in April 2017 foretold what was to become of one of the largest truckload carriers
Celadon Group (
OTC: CGIP) 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.
Celadon will be the largest truckload carrier to file bankruptcy in history. The north-south truckload carrier has 2,695 trucks, including 2,000 in the United States, 360 in Canada, and 335 in Mexico. The company is a dominant carrier on the I-35 corridor, running freight from Laredo to the Midwest, with a large concentration in the automotive sector.
The company’s bankruptcy and likely shutdown will result in some capacity exiting the market at a time when the truckload market is struggling from over capacity. Large enterprise carriers running similar networks to Celadon will find new lane opportunities and a pool of high quality drivers. CFI, part of Transforce (
TSX: TFII), is Celadon’s largest north-south competitor. PAM (
NASDAQTSI) is also likely to benefit, having deep exposure to the automotive sector and a large cross-border presence. Third-party logistics providers specializing in cross-border freight like Forager Logistics should also benefit from a sudden removal of NAFTA capacity.