Celadon Bankruptcy Strands Truckers, Leaves Thousands Jobless
(Bloomberg) -- Over the weekend, thousands of Celadon Group truck drivers were left stranded and confused after the company’s fuel card provider temporarily shut off access out of fear of not being repaid. By the time Celadon officially filed for bankruptcy on Monday, drivers were either stranded at truck stops, seeking rides home or en route to return trucks to Celadon terminals -- all were about to lose their jobs.
ComData Inc., the card provider, eventually restored fuel access to drivers after getting an advance of $850,000 from Celadon debtor-in-possession lender Blue Torch. By that time some drivers who couldn’t contact their managers had abandoned their loads and were left without transportation home.
Others, like driver Melissa Pearre, were asked to return the trucks to Celadon terminals. Pearre was told that as long as she returned her truck to a terminal in Indianapolis, she would receive her paycheck, but getting home from there was another challenge.
“Honestly, if my husband wasn’t able to come and pick me up I don’t know what I would’ve done with everything that was in my truck because I didn’t have money for a storage unit,” Pearre said. “I couldn’t afford a rental car and they were only offering bus tickets.”
Indianapolis-based Celadon has attributed its need for bankruptcy to falling freight rates and a $42.2 million settlement with the U.S. Department of Justice related to misleading shareholders.
In connection with the DOJ investigation, two former Celadon executives -- William Eric Meek and Bobby Lee Peavler -- were arrested on Dec. 5 on federal securities and accounting fraud charges. Meek and Peavler were charged in an indictment for their alleged role in defrauding shareholders, falsifying accounting records and misleading independent auditors and regulators, resulting in the loss of over $60 million in shareholder value.
Pearre believes Meek and Peavler’s misconduct resulted in the crumbling of the company. “I don’t blame Celadon as a whole,” she said. “I blame the guys who got arrested.”
Representatives for Celadon and lawyers for Meek and Peavler couldn’t be reached for comment.
”Celadon has faced significant costs associated with a multi year investigation into the actions of former management, including the restatement of financial statements,” Celadon Chief Executive Officer Paul Svindland said in a statement Monday. “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.”
Though Celadon filed for Chapter 11 bankruptcy protection, which permits reorganization, it plans to wind down all of its operations internationally with the exception of its Taylor Express business. That means upwards of 3,000 drivers and administrative workers are poised to lose their jobs by the end of this week.
Bridgette Reinsmith, the founder of Teddy’s Truckers Association, a support group for drivers, set up a Facebook group to help Celadon drivers return home, get medical assistance and find new jobs. When one driver with diabetes ran out of fuel and couldn’t idle in his truck, a member of the association helped fund a motel room to keep him safe, she said.
“There are still trucks that are on the road, I confirmed that this morning,” Reinsmith said in an interview Wednesday. At this point the association’s goal is to help drivers “finish getting home if they need it and connect them with jobs -- for truckers it’s going to be easier for them to get jobs, for administrative staff I think those markets are going to get a little bit more flooded.”
©2019 Bloomberg L.P.