Truckload carrier Celadon Group Inc. has filed for relief under Chapter 11 of the U.S. Bankruptcy Code and has effectively shut down all of its business operations. The one exception is its Taylor Express business, an independent subsidiary based in Hope Mills, N.C., which will continue to operate while Celadon pursues a going concern sale of its operations.
Celadon says it will use its Chapter 11 proceedings to wind down its global operations. The company had a fleet of approximately 3,300 tractors and 10,000 trailers, with nearly 4,000 employees.
In a statement, CEO Paul Svindland said, “We have diligently explored all possible options to restructure Celadon and keep business operations ongoing; however, a number of legacy and market headwinds made this impossible to achieve. Celadon has faced significant costs associated with a multi-year investigation into the actions of former management, including the restatement of financial statements.”
Svindland was brought on board as CEO in July 2017, in the wake of an investigation by the U.S. Department of Justice and the Securities and Exchange Commission.
Earlier this year, Celadon “agreed to pay $42.2 million to settle fraud claims after filing false financial statements and lying to auditors in efforts to hide losses of its aging trucking fleet,” according to the Wall Street Journal. Celadon admitted to inflating the value of more than 1,000 used trucks through false transactions with a third party.
“When combined with the enormous challenges in the industry, and our significant debt obligations, Celadon was unable to address our significant liquidity constraints through asset sales or other restructuring strategies,” Svindland added. “Therefore, in conjunction with our lenders, we concluded that Celadon had no choice but to cease all operations and proceed with the orderly and safe wind down of our operations through the Chapter 11 process.”
To support the wind down of operations, Celadon’s lenders have agreed to provide incremental debtor-in-possession financing.
Celadon, based in Indianapolis, Ind., was founded in 1985 as a small, dry van carrier with just 50 leased trucks and 100 leased trailers. By 1994, Celadon completed an initial public offering, and claims to have become the largest provider of international truckload services in North America, with over 150,000 border crossings annually at its peak.
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