Why Celadon is filing Chapter 11 instead of Chapter 7
Last Friday, December 6, FreightWaves reported that Celadon intended to file Chapter 11 bankruptcy and now the company has made it official. On the surface, it sounds like Chapter 11 will give hope to at least some of the 4,000 employees at the company. Chapter 11 is the process used to describe a restructuring where the company can continue to operate. If the company had pursued a Chapter 7 bankruptcy, it would result in a full shutdown, but this didn’t happen.
The company chose the Chapter 11 process for very specific reasons – it intends to operate two of the company’s subsidiaries to help secure funds for the creditors. This does not mean that Celadon’s business will survive intact. The bankers will appoint a trustee that work alongside the lenders intends to pursue a structured liquidation of the various assets, including the operating business units.
The over-the-road business is the largest entity inside of the company and the one that is most recognized across the industry. This is being shut down. Unfortunately, after a gallant attempt by management, the company was unable to save the carrier’s flagship. The over-the-road part of the company has been shuttered and the assets will be sold off to the highest bidder, including trucks and trailers. Real estate, the most valuable portion of the assets, will also be sold, likely to separate bidders.
As reported by FreightWaves’ Canadian reporter, Hyndman Transport, Celadon’s Canadian subsidiary, was also shut down yesterday. Hyndman, an 82-year old company, had been headquartered in Ayr, Ontario.
“Lots of drivers are in shock,” a driver told FreightWaves on the condition that his name was not published. “So far, we are frozen. No new loads and all current drivers on loads are being told to finish them and bring their equipment back to the yard.”
Story continues HERE @ freightwaves.com
Related story: Celadon’s Mexican carrier Jaguar Transportation ‘still pulling strong’
Source and credits: freightwaves.com // iTrucker / Mario Pawlowski