The aftermath of the closing and subsequent bankruptcy filing of Indianapolis-based carrier Celadon made for prominent headlines in trucking industry news from December 2019 until late February 2020.
But that was before COVID-19 supplanted almost all news coverage ranging from major media outlets to industry-specific publications and digital media. The fallout from the Celadon bankruptcy continues, but those not following the story may have lost track of the complicated proceedings in a case involving multiple subsidiaries in numerous states and three countries. While proceedings may be moving a bit slower than usual during the global health crisis, plenty of action is ongoing behind the scenes.
Celadon, among the largest carriers in the U.S. and the largest serving the U.S., Canada and Mexico, abruptly ceased operations without notice to employees over the weekend of Dec. 7-8, 2019. After sending announcement to drivers via the carrier’s in-cab messaging system shortly before midnight on Dec. 8, Celadon filed for bankruptcy just hours later.
In the meantime, the carrier’s actions stranded drivers across the three countries. Fuel companies canceled driver cards, and reports indicated some equipment was repossessed. The initial confusion eventually cleared, and all drivers returned home with the assistance of other carriers and businesses. It then became apparent that Celadon’s Chapter 11 filing would spark the most significant truck carrier bankruptcy proceedings in U.S. history.
The following is a summary of significant developments in the Celadon bankruptcy and wind-down since late February.
PAM abandons acquisition of Celadon’s Mexico assets; new buyer found
In February, Arkansas-based carrier PAM announced an agreement with Celadon’s bankruptcy oversight team to acquire the former carrier’s Mexico-based operations at the cost of
$7 million. As an intracontinental carrier, before its bankruptcy Celadon managed several holdings in Mexico, including 100% of Celadon Mexicana and Jaguar Logistics & Leasing Servicios. The company also controlled 75% of Transporación Corprativos. The agreement included Mexico tax refunds due to Celadon for approximately $18.5 million.
Following PAM CEO David Cushman’s retirement on May 1, reports emerged that PAM sought to renegotiate the terms of the agreement. The reports suggested the unforeseen impacts of COVID-19 on the trucking industry — and PAM operations — had created new market conditions. Celadon’s representatives showed no interest in renegotiating the deal and instead sought another buyer.
White Willow Holdings of Newfields, New Hampshire, back by New York City investment firm Luminus Management LLC, provided the most viable offer for the Mexico assets. In early May, a press release announced the New Hampshire carrier would acquire Celadon’s Mexico business for $2.7 million. Terms included the $18.5 million in Mexico tax refunds and a commitment on the part of While Willow Holdings to invest $550,000 in the Mexico operations immediately. Assets included in the transaction included all former Celadon holdings, the most prominent being Jaguar Logistics & Leasing, previously valued at $23.4 million.
White Willow is no stranger to the Celadon proceedings. The company purchased Celadon’s North Carolina-based carrier Taylor Express earlier this year at the cost of $14.5 million.
Celadon spin-off assets acquired in a joint venture
A joint venture including Chicago-based Hilco Global and New York City’s Colbeck Capital Management acquired assets associated with a former Celadon truck leasing affiliate on May 1. The terms of the agreement were not disclosed. Former Hilco Performance Solutions president Steven Tanzi is CEO of the new venture to be known as H19 Capital LLC. H19 Capital should not be confused with 19th Capital, a similar joint venture between Celadon and Toronto-based Element Fleet Management Corp.
When Celadon formed Quality Companies to handle its truck-leasing business in 2015, it assumed a minority role in the venture, owning 49.99% of 19th Capital. Celadon sold its entire share to Element Fleet Management three years later. Quality Companies came under federal scrutiny when Celadon auditors raised questions about investment strategies. The investigation revealed that executive decisions and handling of assets cost stockholders more than $60 million. The executives involved in the dealing were eventually charged with federal crimes.
In the May 1 agreement, H19 Capital LLC acquired assets that included thousands of trucks and trailers, all service and support machinery equipment, intellectual property, a portfolio of accounts receivable, and 600 existing truck leases. Real estate included in the transaction consists of two truck yard leases and a 136,000-square-foot maintenance facility in Indianapolis. The facility has a storage capacity of 1,700 trucks.
Hilco Global intends to continue operating the truck-leasing company and hopes to expand operations during the anticipated post-pandemic economic resurgence. Element Fleet Management originally planned to close 19th Capital and disburse its assets after three years. Officials stated more recently that the deteriorating market for used trucks forced a change in its time line, resulting in the sale to H19 Capital LLC. Element Fleet Management and H19 Capital noted that the agreement would save “dozens” of jobs.
Celadon assets among $43 million in auction proceeds
In late April, Ritchie Brothers Auctioneers of Houston held a two-day auction that included trucks and trailers previously owned by Celadon. While the exact equipment and auction value for Celadon-specific assets are unknown, the sale included 370 trucks and
350 dry van, reefer and flatbed trailers.
FreightWaves reported that the auction included “hundreds of trucks and trailers” previously owned by Celadon. Likewise, Ritchie Brothers indicated it would be selling more than 300 Celadon trucks and 1,400 trailers, including International ProStars, Kenworth T680s and Volvo VNL6702s.
The Houston auction also included farm and oil-drilling equipment, making it difficult to estimate the portion of the $43 million in sales related to the trucks and trailers. Preregistered bidders totaled 8,600 from 62 countries worldwide. Of total sales, 93% went to U.S. bidders, primarily in Texas, California and Florida. Other buyers included companies or individuals in Peru, India and Italy.
Stakeholders selected Ritchie Brothers to sell more than 1,700 pieces of Celadon equipment at auction during March, April and May at 19 locations in the U.S. and Canada. Ritchie Brothers delayed all but three auctions due to COVID-19.
As of mid-May, Ritchie Brothers plans to sell 563 pieces of Celadon equipment in online auctions at 16 locations by the end of June. A schedule of auctions is available at www.rbauction.com/store/celadon. The website also provides instructions for bidders and guidelines for limited on-site equipment inspections.
Ritchie Brothers describes its inventory with the note, “Celadon Group’s reputation for using best-in-class trucks, maintenance programs and technology over their 30 years in business is second to none, and the pride in ownership shows in every asset.”
Former Celadon executive team members assume new roles with new firms
Reliance Partners, a commercial insurance agency with several U.S. locations, has named Thom Albrecht, a former Celadon executive, as its chief financial officer and chief revenue officer. Albrecht, while lacking experience in the insurance sector, brings his reputation
as a leading analyst of freight transportation to the company. Reliance headquarters in numerous states, including Tennessee, Alabama, Texas, Illinois, Wisconsin, California and Florida.
Albrecht is the last of Celadon’s five-member executive team to assume a leadership role at another U.S. firm.
In January, former Celadon CEO Paul Svindland assumed the same post with STG Logistics of Chicago.
Celadon’s former executive vice president and general counsel joined Svindland at STG Logistics in March, accepting the role of chief administrative officer and general counsel.
In late April, Celadon’s former vice president and chief accounting officer Vincent Donargo joined the Indianapolis tech start-up Novus Capital Corp., a company announcing its intent to go public with a $100 million offering.
Previously Celadon’s chief operating officer before the company’s bankruptcy filing, Jon Russell left the company in November 2019 to join Indianapolis-based TVC Pro Driver, a provider of legal services to commercial truck drivers and fleets.