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Celadon bankruptcy, biggest in truckload history, expected by midweek (with video)

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, Dec. 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, Dec. 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 Luminus and Blue Torch to secure further financing. Those talks fell through Thursday morning, Dec. 5, when talks between Blue Torch and Luminus 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.

Many top customers of the company have been notified, in an effort by management to mitigate freight being stranded after a filing. Celadon handles significant volumes of critical automotive freight and told its customers that it did not want their plants to shut down. Sources not associated with the company have also told FreightWaves that FedEx (NYSE:FDX) has stopped loading Celadon-branded trailers.

Celadon will be the largest truckload carrier in history to file bankruptcy. 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 Interstate 35 corridor, running freight from Laredo, Texas, 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 overcapacity. 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 (NASDAQ:PTSI) 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.

FreightWavesTV Anchor Emily Szink sits down with JP Hampstead to discuss the impact of the Celadon bankruptcy.

Celadon was founded in 1985 by Stephen Russell and Leonard Bennett with 50 leased tractors and 100 trailers — its first contract was hauling automotive parts to a new Chrysler plant in Mexico. The company expanded rapidly into a true North American transportation company, offering dedicated, expedited, long-haul, local and refrigerated transportation services. At its peak, Celadon operated 4,000 trucks, while the company’s leasing division, Quality Equipment, had 11,000 trucks.

Russell was a native of New York City and earned a bachelor’s degree and MBA from Cornell University. A collector of Andy Warhol’s work and a lover of the arts, Russell named his trucking company after a style of ancient Chinese pottery; tellingly, “Celadon” is one of the very few words that are the same in English and Spanish.

Celadon came to public markets through an initial public offering in 1994 and was listed on the New York Stock Exchange in 2009.

Russell stepped down from the CEO role in 2012; Paul Will succeeded him. Following the onset of illness, Stephen Russell resigned from Celadon’s board in December 2015 and died the next spring.

Erik Meek and Bobby Peavler, both of whom were indicted on Thursday, were Celadon officers after the Russell era. Meek, the former chief operating officer, and Peavler, the former chief financial officer, are accused of orchestrating a scheme to exaggerate the value of some of Celadon’s trucks, which should have been sharply depreciated.

A short seller’s report that was published on the stock research and commentary site Seeking Alpha on April 5, 2017, “Celadon Group: A Story That Ends At Chapter 11,” crashed the stock. The report outlined the accounting shenanigans that Meek and Peavler allegedly had been responsible for. A month later, the company’s auditor, BKD, pulled out of the company. 

Later, Celadon announced it would have to restate some recent financial reporting, and the stock further plummeted. That July, new management was brought in: Paul Svindland, from XPO and EZE Trucking, came on as CEO. Thom Albrecht, who had worked in transportation equity research at Stephens and BBT before serving the industry as a consultant, joined Celadon as chief financial officer.

It was Svindland and Albrecht’s task to turn around a large truckload carrier whose financial records were completely uncertain. The new management team set to work reassuring investors and creditors, identifying problems and divesting assets. The larger deals were reported in 8-K filings, but many more were too small to require public notice; much of the proceeds went to pay creditors.

Ultimately Svindland and Albrecht had a very narrow margin of error in which to operate the company and achieve profitability; the precipitous collapse of trucking rates in the fourth quarter of 2018 could not have helped. At this time, the impact of the General Motors strike on Celadon’s revenue is unclear, but that 40-day-long shutdown was certainly detrimental.

This is a developing story. FreightWaves will continue to provide updates as we get more information.

119 Comments

  1. Jerron moone

    This company illegally fired me before but lost the court case I forced.The judge stated in the official ruling that the company was deliberately lying to the court by continually changing there story to my allegations.

  2. Matthew Kane

    Not even going to comment on the greedy idiots who have screwed many good people. So I would like to offer some assistance to any Celedon driver who gets stranded near the Philly/NJ area. I’d like to offer you some help to get home. Thats the best I can offer. Contact me directly at Riteload.com. Matthew Kane, Founder. 856 213 5961.

    1. Tom Mullaney

      As a driver, (not for Celadon) I applaud you sir! Not many people would step up in this fashion. It’s the Christian thing and the right thing to do. Thank you again!
      Sincerely,
      Tom Mullaney
      Danny Herman Trucking
      Driver

  3. Anthony Peetz

    Good riddance, Celadon is a terrible company. Many of the drivers have complained of poor wages, poor relations between drivers and staff and just an overall terrible experience. Goodbye Celadon, and I don’t feel sorry for the drivers either. You morons have seen the writing on the wall for at least a year or more.
    Stranded, broke or out of fuel, y’all took a bite of the shit sandwich, now it’s time to swallow. Lol

  4. Stacy Sprouse

    All you big companies lobbied for all these new laws and regulations.
    Big business wanted that ELD so much ! Now no one wants to drive and you cant make no money if you do . So I hope all you big companies go under . I just need a to make sure I got a good job .before all the steering wheel holder you know the new breeds lazy asses that need all this technology to drive . That has done the industry in . Is out of a job

    1. Noble1

      Oh my dear you’re missing the ELD point . The ELD point is for competitive reasons . Now the big boys can cut your market share and gain it at your demise . That’s what it’s all about . They have more capacity . So while they are cutting your runs they are gaining on your loss while saving on fuel . And while they are doing that they are lobbying government concerning a truck driver shortage and are part of immigration programs , reducing age to drive commercial vehicles and catering to women . It’s all propaganda feeding into their cost cutting plan .

      1+1 = 2

      If they can cut down on your speed(speed limiter lobbying) and your flexibility(ELD) it’s to their advantage . This plan of “theirs” is not happenstance , it has been well thought out . And during this freight contraction cycle they’re laughing right to the bank .

      Do you really think that they care about safety ? Do you think they care about the health of people or the planet ? Of course not . All they care about is expanding and contributing to their bottom line . In the end it pays out tremendously , especially in director bonuses . Freight transportation is HUGE business ! It all comes down to PROFITS !

      The majors are a far cry from going under . They’re simply squeezing the mismanaged and clowns in the industry .

      And they couldn’t careless about drivers . They have a plan to replace them too . Autonomous trucks ! Drivers are considered to be a simple tool . A means to an end . A COSTLY one .

      The more you’re squeezed and complain equals to proof that their plan is working .

      Remember one thing , all the problems that the industry has encountered were and are created . It just didn’t happen on its own . This has all been part of their “bigger plan” , and the “wise” not only will survive , they will expand .

      And once the industry is held among a few major hands it will be deemed as “essential” . Once deemed as an “essential service” then even if you’re part of a “Union” you won’t be “allowed” to go on “strike” and cause a “work stoppage” .

      They have the industry right where they want it .

      And you’re just a pawn in their affair .

      Apologies for being so blunt . The truth is not always joyous .

      In my humble opinion ………..

      1. Stephen Webster

        You are right Celadon has been pushing truck drivers and cheating them for some time. They a another large trucking company out Cambridge Ontario have trying to put small trucking companies out of business for the last 12 plus years
        The non profit group that helped me out and many other truck drivers took Celadon to Court to break truck leases when the truck drivers could afford to support their family. I told the Ford government and 3 major truck news outlets last December when Ford visited Challenger. I told the next 3 transport ministers in Ontario. They kept saying that they needed more time to study the problem
        I have spent a lot of time after the accident I was in dealing with other truck drivers that got cheated. The group of non of profits give time to and transport people in the wheelchair van do not understand why these companies are allowed to do this and pushed the cost on to the taxpayer and charities.

  5. MaryS

    This is not the first time so Celadon has gone belly up. They went belly up probably 10 years ago and I haven’t seen many of their trucks out on the road like I used to. I’m really surprised to hear them going through it one more time

  6. Prime Logistics

    We need at least 1 year OTR experience.
    We have great miles for company drivers. We pay $0.62 per mile for solo and $0.72 per mile for teams. Trucks are well maintained. We do orientation in Chicago and we run 45 states OTR. We reimburse up to $150 for travel expenses.

    In order to make money as company driver or owner, we need at least 3 weeks out 3-4 days off or 5 weeks out 5-7 days off.

    We have great leases where you own the equipment at the end WITHOUT any DOWN and BALLOON payments. We welcome owner-operators with their own equipment as well. We pay 90% of the freight and run a minimum monthly average of $2 per mile and higher (Gross Revenue/Miles) Owner-operators who lease to purchase from us and run 3000 miles per week, take home $2500-$3500 per week clean cut after all expenses. Owners with their equipment take home more due to the truck payments. We run all loads by the owner-operators before we book them. We give 30 day warranty on the lease to purchase trucks plus the manufacturing warranty left on them.

    TRUCK LEASE:

    2012 VOLVO/FREIGHTLINER-$190 per week for 4 years
    2013 VOLVO/FREIGHTLINER-$237 per week for 4 years
    2015 FREIGHLINERS-$379 per week for 4 years
    2016 FREIGHLINERS-$504 per week for 4 years
    2018 FREIGHLINERS-$631 per week for 4 years

    TRAILER LEASE

    2014-$395 per week for 3 years
    2013-$355 per week for 3 years
    2012-$316 per week for 3 years

    REEFER TRAILER RENTAL-$275 per week
    CARGO AND LIABILITY INSURANCE-$200 per week
    IRP PLATES-$2K per year
    2290 HIGHWAY USED TAX-$575 per year

    People start as company drivers and switch to owner-operators if they want. They can lease the trucks they are driving. That is a great way to test the trucks and decide if they are right for them.
    We have been doing this for 15 years.

    If you are interested in joining our company, you can fill out an application online at https://form.jotform.com/73218123316145. BUT make sure if you are approved, you are ready to come. We don’t have time and money to waste just checking records. Thank you.

    http://www.primelogisticscorp.com
    888.919.8181
    Thank you.

    1. Noble1

      …..

      Out of curiosity I went to check some reviews .

      Here are 4 that I found aside from those posted on Facebook .

      Quote :
      “May 19, 2017
      Helpful (4)
      Prime Logistics Corp Logo
      “Not the best company to drive for”
      Former Employee – Class A Truck Driver in Rolling Meadows, IL
      Doesn’t Recommend
      Neutral Outlook
      I worked at Prime Logistics Corp full-time for less than a year
      Pros
      Money can be good at times
      Cons
      First off the company is shady. They don’t tell you from the beginning that even as a company driver you have to pay a deposit on the truck. They wait until you fly in or get bussed in to Chicago (you have to pay for it) and you start orientation to inform you of that so at that point you’re obligated to comply as most guys need the money and can’t afford to just go back home. They tell you they deduct it from your…
      Show More
      Advice to Management
      Don’t be shady. Not telling drivers about a deposit and stuff until after they got there and then not giving it back even though the equipment is returned in good condition

      And another ,
      Quote :
      “Helpful (4)
      Oct 16, 2019
      Prime Logistics Corp Logo
      “SHADY COMPANY”
      Current Contractor – Owner Operator in Rolling Meadows, IL
      Doesn’t Recommend
      Negative Outlook
      I have been working at Prime Logistics Corp for more than a year
      Pros
      NONE! this company is nothing but a con
      Cons
      They are ripping people off left and right. Taking drivers money after they pull loads and making up lies to keep it.
      Advice to Management
      theyre stupid!! theyre the ones keeping drivers money”

      And another ,
      Quote :
      Jun 19, 2019
      Helpful (2)
      Prime Logistics Corp Logo
      “Do not do it!!!!!!!”
      Current Employee – Truck Driver 
      Doesn’t Recommend
      Negative Outlook
      I have been working at Prime Logistics Corp full-time for less than a year
      Pros
      there is no pro to working at this place period
      Cons
      long list.
      first they lied about everything they told you.
      they never pre plan you
      they dont work on weekend or after certain hours
      they steal your money every week little by little
      the first week you work you owe them money.
      Advice to Management
      they are some crooks and do not care about their drivers”

      and another .
      Quote :
      “Run!
      Professional Driver (Former Employee) – Utica, MI – May 27, 2019
      Worst company to work for from paid to benefits. Managers were disrespectful and kept lying. They treat people like outcasts and don’t pay them well and on time. They make fake promises just to keep you around longer. There was no benefits, no bonuses overall the worst company I’ve ever worked. Of course they have their own entourage to come on here and write fake reviews fake promises. Please do me a favor, know your worth and run from this company.
      Pros
      None
      Cons
      None

      You may also want to check the reviews on their Facebook page under Prime Logistics Corp .

      Do your due diligence AND Be vigilant !

      In my humble opinion …………

      .

  7. Julie Ridgway

    They already did it. My brother-in-law was one of their drivers and he is stranded in Texas. Two other drivers refused to get out of their trucks and the police were called and threw them and their stuff out of the trucks and they are left them where they were. This is bullshit and they aren’t even getting paid.

Comments are closed.

John Paul Hampstead

John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.