Decreased demand for shipping that has caused lower freight rates, as well as higher operating costs driven by inflation and higher interest rates, are leading trucking companies into financial distress and eventual bankruptcy filings.
The lingering freight trucking recession that the logistics industry has faced over the last two years continues forcing companies into Chapter 7 bankruptcy and liquidation. In a lot of these cases, companies have their backs against the wall, facing lawsuits from creditors.
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Freight forwarder company Boateng Logistics ceased operation after it on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate, and 92-year-old trucking company Arnold Transportation Services laid off all of its employees and shuttered operations five days before filing for Chapter 7 liquidation on April 30.
Related: Iconic restaurant chain ready to file Chapter 11 bankruptcy
Another shipping company, U.S. Logistics Solutions, which was owned by private equity firm Ten Oaks Group, shut down operations, laid off its employees, and on June 21 filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas in Houston with plans to liquidate its assets.
California-based trucking company Flex Intermodal's authority to operate was revoked by the Federal Motor Carrier Safety Administration in August 2023, forcing the company to shut down operations.
A wave of lawsuit judgments against Flex by four companies in California – Equify Intermodal, Flexi Van Leasing, Balboa Capital, and Equity Financial – forced the debtor on Sept. 13 to file for Chapter 7 bankruptcy liquidation, as it had lost its ability to generate revenue.
The Fremont, Calif.-based shipping company listed up to $100,000 in assets and $1 million to $10 million in liabilities in its petition filed in the U.S. Bankruptcy Court for the Northern District of California. The debtor indicated that it doesn't expect to have sufficient assets to make payments to unsecured creditors.
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Trucking company ceases operations, will liquidate
Finally, troubled Irving, Texas, trucking company Sunset Logistics Inc. and five affiliates have filed for Chapter 7 bankruptcy protection to liquidate their assets after ceasing operations.
Related: Huge truck rental company files for Chapter 11 bankruptcy
Sunset Logistics on Oct. 3 filed its petition in the U.S. Bankruptcy Court for the Northern District of Texas in Dallas following a shutdown of all operations on Sept. 29, blaming a bad economy, low freight rates, and rising costs, FreightWaves reported.
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The trucking company's affiliates that also filed Chapter 7 include Sunset Express Inc., Mobile Fleet Marketing Inc., Glidewell Leasing Co. LP, Glidewell LLC, and Sun-Tech Leasing of Texas.
The debtors claimed that they were unable to continue without debt relief, and also faced a lawsuit filed in April 2024 in the U.S. District Court for the Northern District of Alabama from their factoring company Porter Capital of Birmingham, Ala., alleging Sunset Logistics and its affiliates owe it $5 million, plus accruing costs and expenses, from a defaulted recourse factoring agreement.
The Chapter 7 filings place an automatic stay on all litigation while the bankruptcy cases proceed.
Sunset Logistics listed up to $1 million in assets and $10 million to $50 million in liabilities in its petition.
The debtor, which operates 90 power units and also employs 90 drivers, reportedly had not paid company drivers their final paychecks or refunded $1,000 in escrow and maintenance account funds by mid-October.
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