Bankrupt Celadon receives partial approval to pay employee wages

Screen Shot 2020 01 15 at 10.09.31 AM
Screen Shot 2020 01 15 at 10.09.31 AM
Former Celadon employees will potentially receive a total of $4.6 million in owed wages following bankruptcy court ruling. The Trucker file photo

A federal bankruptcy court has approved Celadon’s request to compensate drivers, in part, for unpaid work hours and miles in the days leading up to its December 9 filing for Chapter 11 bankruptcy.

Celadon originally requested to pay drivers $5.4 million in wages owed, but the court-approved $4.6 million. A sum of $900,000 was set aside to compensate independent contractors, an increase over the $528,000 original proposal. In addition, $300,000 was listed for owed employee benefits.

While the court ruling authorizes Celadon to pay the wages, it is not required to do so. The total amount of wages actually owed is unknown, as is the percentage of the total $4.6 million represents.

Celadon abruptly filed bankruptcy on December 9, 2019, following a weekend of rumors and a lack of communication with drivers. Numerous drivers reported being stranded as fuel cards were canceled, while others said their equipment was repossessed from truck stop parking areas. In response to what will possibly be the largest bankruptcy among carriers in the nation’s history, the trucking industry responded in force to assist Celadon employees, some offering bus tickets home. Likewise, other carriers immediately recruited the newly-unemployed drivers with sign-on bonuses and promises to get them back on the road immediately following orientation.

Last week, Celadon requested that its Canadian affiliate, Hyndman Transport, be included in the bankruptcy proceedings and that courts in Canada accept the decisions of United States Judges. While cross border recognitions of bankruptcies are common between the U.S. and Canada, a key difference in the two nation’s laws is that in Canada, employees receive preferential standing as creditors to claim any compensation such as severance, vacation pay and wages in lieu of a required layoff notice. The lack of layoff notice provided to Celadon employees has already been challenged in court as a violation of U.S. law.

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