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Shuttered California carrier files for bankruptcy

Carrier says alleged embezzlement by former employee among factors that precipitated filing

(Photo: Jim Allen/FreightWaves)

A California-based trucking and warehousing company, forced to cease operations more than a year ago, recently filed for Chapter 7 liquidation.

In July 2019, Terrill Transportation Inc. of Livermore, California, abruptly closed its doors amid a brutal freight recession that forced several carriers to shut down.

At the time of its closure, Kevin Terrill, president of Terrill Transportation, also operated a warehousing distribution business. His company had 30 power units and 36 company drivers, according to the Federal Motor Carrier Administration SAFER website. It also had 12 owner-operators.

What happened?

Attorney Keith McAllister represents Terrill Transportation in the company’s bankruptcy filing.

He said many factors played a role in the company’s demise. As the business continued to decline in early 2019, Terrill was reluctant to let any company drivers go. Despite dropping freight volumes, drivers were still getting paid regardless of how many loads they hauled.

“Part of Kevin Terrill’s philosophy was that he wanted to make sure that drivers had good jobs with good benefits,” McAllister told FreightWaves. “However, he had a high percentage of drivers who were employees and not independent contractors, and that was a problem for the company.”

As freight slowed down, so did the demand for warehousing space, McAllister said.

“Kevin was trying to do everything he could to make the business work,” McAllister told FreightWaves. “But besides the high number of company drivers he had on the payroll, the company got overextended in warehouse space as business declined.”

Negotiations to sell carrier fell through

Before the freight recession that plagued the trucking industry throughout 2019, Terrill Transportation was in serious talks to sell its trucking business to a larger carrier. The deal fell through as rates continued to drop and business slowed, according to McAllister.

In its petition, the company lists its assets as between $100,000 to $500,000 and its liabilities as between $1 million and $10 million. The filing states Terrill has up to 99 creditors. 

No funds are expected to be available to unsecured creditors after administrative expenses are paid.

Terrill claims former employee embezzled funds

The carrier’s bankruptcy filing lists that it has filed a cause of action against a former employee, Robert “Bob” Blough, who worked as a terminal manager for Terrill Transportation.

McAllister confirmed the company filed a police report over a year ago against Blough, alleging embezzlement and fraud of more than $34,365.

When contacted by FreightWaves, Blough confirmed that he formerly worked for the shuttered carrier, but said he didn’t have the “authority to speak on behalf of Terrill Transportation.”

This isn’t Blough’s first brush with the law, according to court filings.

Judge orders Blough to pay $704,000 to California employees union

Before working at Terrill, Blough was ordered by a California judge to repay the San Bernardino Public Employees Association (SBPEA) nearly $704,000 in damages in October 2015.

The SBPEA filed suit against Blough in October 2014, claiming he misappropriated, converted and embezzled money from the employees union. 

Blough served as the general manager of San Bernardino County’s largest labor union from 2005 until August 2013. One of his duties was to hold the cash received by SBPEA from the sale of tickets and other items in the safe and promptly deposit the funds into its bank account.

In 2013, the SBPEA hired new auditors that discovered a large discrepancy between the labor union’s recorded cash receipts and the amount deposited into its account.

According to the lawsuit, between July 2011 and June 2013, auditors alleged that Blough failed to deposit more than $595,400 into the SBPEA’s bank account while he served as GM. 

The suit, filed in San Bernardino Superior Court, alleged that Blough used the labor union’s credit cards to rack up more than $108,300 in personal charges, including fees for storage units, tools, grills and other supplies.

The SBPEA voted to join Teamsters Local 1932 in 2015. Besides listing his terminal manager experience at Terrill Trucking, he also states he served as manager of the Teamsters in San Bernardino County.

Blough declined FreightWaves’ requests to comment on the embezzlement and fraud allegations.

McAllister told FreightWaves he is currently gathering information on Blough to present to the bankruptcy trustee overseeing Terrill Transportation’s Chapter 7 liquidation within the next 10 days. 

It was unclear whether, at the time of Blough’s hiring, the company was aware of the damages he had been ordered to pay to SBPEA.

McAllister said the money Blough allegedly stole from the company is not what forced the carrier to file for bankruptcy.

“It was one of the things that added up to the difficulties the company was having, but it is not what put Terrill into bankruptcy,” he said.

Read more articles by FreightWaves Senior Editor Clarissa Hawes.
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  1. George

    Lol..His problem was he had employees and not owner operators. Yeah if he had ownerops he could have screwed them even harder. Use their fuel and their time collect for freight charges and then file bankruptcy.

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 16 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and If you have a news tip or story idea, send her an email to [email protected].