Truck driver Robert Mitchell, 69, didn’t think he’d get any of the pay he was owed after Celadon Group shut down Hyndman Transport in December. But in May, about C$6,800 (US$5,000) appeared in his bank account — one of hundreds of payouts likely to go out to former employees of the bankrupt U.S. trucking company’s Canadian subsidiary.
“I have a hatred for Celadon. Every little dime we can get back is a way to say, ‘Screw them,’” Mitchell told FreightWaves. “I was glad to get it.”
It amounts to less than half what the 15-year Hyndman employee was owed. But Mitchell and other former Hyndman employees are better off than their colleagues in the U.S. The liquidation of Celadon’s assets under Chapter 11 bankruptcy likely will leave the latter group with nothing, court records show.
Mitchell and other drivers filled out paperwork for the payments earlier in the spring, but many held out little hope.
“It’s the fourth company I’ve worked at that’s gone under. We’ve gotten nothing out of the other ones,” Mitchell said.
More than 350 former Hyndman Transport employees, mostly truck drivers, have applied for payments from Canada’s federal government, according to a report filed Wednesday in Ontario Superior Court. The payments could exceed C$2 million (US$1.5 million) under a law that offers compensation to employees of companies that go bankrupt or enter receivership.
While the funds come from Canadian taxpayers, the federal government generally attempts to recoup the money from company assets. To date, only C$400,000 has been set aside from Hyndman’s assets to cover a portion of claims that have a special status in the liquidation.
A hard-fought legal battle to get Celadon into court
Former Hyndman drivers and other employees had to take Celadon Group to court earlier in 2020 to gain the ability to collect those payments. The U.S. company had effectively abandoned its Canadian subsidiary while taking steps to liquidate its assets.
The legal action halted the asset sales in January. Former Hyndman Chief Financial Officer Jeff Sippel helped lead the effort and accused Celadon of abandoning its financial obligations to its employees and contractors while draining its Canadian assets.
At the urging of a Canadian judge, Celadon secured recognition of its U.S. bankruptcy and agreed to have Hyndman Transport placed into a receivership under a court-appointed trustee.
“This is working out as well as it possibly could for these drivers,” Sara Slinn, a professor at Osgoode Hall Law School at York University in Toronto and a Canadian labor law expert, said in an email to FreightWaves.
Mitchell received the maximum amount allowed under the Wage Earner Protection Program Act about 11 weeks after applying. The law is designed to allow employees of bankrupt companies to recover a portion of compensation they may be owed, including back pay, severance and vacation pay.
“For once the government was efficient,” Mitchell said. “But other drivers are still waiting.”
Mitchell, meanwhile, now works for another carrier, D & J Transportation, hauling bulk agricultural products within Canada. It keeps him closer to home, near Ottawa, so he can spend more time with his wife.
Truck drivers reporting maximum payouts
Anecdotal reports from drivers, including those with far less time at Hyndman, suggest many are getting the maximum allowed under the program: about C$6,800.
The higher payments could mean that the federal government found the abrupt shutdown of Hyndman was in breach of Canadian labor law. It requires 16 weeks notice when large groups of employees are terminated, under certain conditions. In cases of designated group terminations, employees are entitled to pay in place of that notice.
Employment and Social Development Canada (ESDC), the federal department overseeing the compensation, did not respond to FreightWaves’ questions about how much money had gone to former Hyndman personnel and whether it will seek to recover money from the company’s assets.
In January, a spokesperson for ESDC told FreightWaves that the government “attempts to recover the amount paid from the employer’s estate through the bankruptcy or receivership proceedings” after paying former employees.
Canadian government could go after assets
Celadon has already sold off its most valuable assets in Canada: Hyndman’s former headquarters in Ayr, Ontario, and a terminal in Winnipeg. Most of the money has been disbursed in accordance with Celadon’s Chapter 11 bankruptcy to the company’s largest secured creditors.
A sale is pending on Hyndman’s original headquarters, a small facility in Wroxeter, Ontario, court records show. Proceeds from that sale could become a target of federal efforts to reclaim taxpayer money.
Andrew Hatnay, a lawyer with Toronto-based Koskie Minsky representing the former Hyndman employees, did not respond to FreightWaves’ request for comment about the payments.