Largest Truckload Carrier files Bankruptcy in United States History
The recent article I read concerning the bankruptcy filing by Celadon had some real disturbing bits of news as to why the bankruptcy occurred. The federal investigation found accounting fraud, filing fake financial statements, and lying to auditors, none of which should be considered any small undertaking. Each appears to have been done with intent to defraud.
Celadon’s challenges came to a head rather quickly in early December 2019. Rumors began which led to lenders reprocessing equipment from Celadon. Bankruptcy followed which led to notifications of Celadon’s customers to find other carriers. In the end the employees and drivers found out through various channels that the Chapter 11 bankruptcy was in progress. Some drivers found out in the worst way by having their tractors reprocessed in whatever locations they resided.
For a transportation business that hauled products throughout North America, it was a bitter pill to swallow. Celadon’s CEO made the statement that “all efforts were made to keep the operation in play but found the legacy and the market conditions too challenging to keep them afloat”.
In Spring of 2019 Celadon agreed to pay approximately a $42 million settlement, some of which is still owed to the Justice Department. Later in 2019 Celadon’s former CFO and COO were charged with allegations of fraud.
I took a few bits of wisdom from this article:
- No matter the size of the business, make sure you have checks and balances in place to prevent this sort of thing from happening to you and your transportation business.
- Outside eyes such as auditors should have caught this, but when you have executives who can lie well to auditors, your checks and balances have to be structured internally and externally.
- Allowing your hard working employees and drivers find out in the fashion they did has and will leave an everlasting bad taste with you and possible with the trucking industry.
- Celadon was a publicly traded trucking business. It is my hope that with private run transportation businesses, you will be able to spot, react, and structure a plan before a bankruptcy filing is necessary.