A new report indicates that an Indiana-based mega-carrier plans to file for Chapter 11 bankruptcy protection this week.
On Friday, Freightwaves reported that Indianapolis, Indiana-based Celadon Group Inc. would file for Chapter 11 no later than Wednesday, citing internal sources. This would be the largest truckload carrier to file for bankruptcy protection in U.S. history.
Freightwaves says that a number of the company’s customers have already been notified about the bankruptcy, but it isn’t clear at this point whether Celadon will cease operations.
Representatives from Celadon told CDLLife via phone that they were not shuttering their operations.
The company currently employs around 2500 truck drivers and operates nearly 2,700 trucks in the U.S., according to the FMCSA’s SAFER website.
The news comes the same week that the Department of Justice (DOJ) announced that two former executive officers with Celadon would face charges related to fraud and lying to investors.
William Eric Meek, 39, and Bobby Lee Peavler, 40, were each charged with one count of conspiracy to commit wire fraud, bank fraud, and securities fraud, five counts of wire fraud, two counts of securities fraud, one count of conspiracy to make false statements to a public company’s accountants and to falsify books, records, and accounts of a public company, and one count of making false statements to a public company’s accountants. Peavler was additionally charged with two counts of counts of making false statements to a public company’s accountants.
Additionally, this spring, Celadon agreed to pay $42.2 million in restitution to shareholders for “filing materially false and misleading statements to investors and falsifying books, records and accounts.”
Celadon has been in financial trouble for years following an April 2017 report from a research group called Prescience Point that alleged that Celadon used accounting tricks like off-balance-sheet entities to hide the fact that the company is worth almost $0. That 2017 report predicted that “CGI (Celadon Group Inc.) will be bankrupt or insolvent within 1-2 quarters; existing shareholders will be wiped out.”
Since that report, an SEC investigation was launched and the company faced numerous lawsuits from investors. Celadon restructured their C-Suite, with Meek resigning and took measures to “exit or downsize unprofitable or non-core businesses.“ These efforts included selling off their flatbed division to PS Logistics and shuttering their driver training schools.
This is a developing story.
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