Pandemic-Era Logistics Problems Cause a Large Shipping Company to File for Bankruptcy

Several trucking companies around the nation have been forced to file Chapter 11 bankruptcy to reorganize or even file Chapter 7 to liquidate assets and recover partial losses.

The high degree of coordination needed to run a logistics company properly can easily fall apart when one link in the chain is broken. During the pandemic, many companies faced impossible issues at every turn and struggled to keep operations moving.

In many cases, shipping and logistics companies that were unable to deliver shipments as promised faced lawsuits from customers waiting for their items. In this case, getting sued by another medium or large retailer for a breach of contract is more than enough to send a logistics company into Chapter 7 bankruptcy.

Chapter 7 is considered a liquidation bankruptcy: the company does not have to create a repayment plan but needs to sell all its assets to pay creditors. Chapter 11 is a reorganization bankruptcy that allows a business to maintain operations while repaying creditors at a slower rate.

The timing of the filing might be purposeful. In 2016, a former company truck driver died from growing, and the trial was meant to begin just four days later. The company may have timed the bankruptcy filing purposefully to dissuade any financial responsibility in the wrongful death suit.

Another 92-year-old trucking company called Arnold Transportation Services laid off all of their employees and shut down normal work on April 30 of this year.

The large company that served the nation had to shut down its operations and lay off all employees. The company currently has plans to liquidate its assets and pay off existing debts before shutting down its LLC.

This number includes 864 direct employees, 305 contractors and temporary workers and 57 owner-operators.

However, the company was only able to show $100 million in assets during the petition. This means the company could be shorting hundreds of millions of dollars to creditors.

Because the company failed to file the proper paperwork, a former employee sent a class-action adversary proceeding complaint in the U.S. Bankruptcy Court against the debtor.

However, the company says that it paid out all final paychecks on time and in full. But this might not be enough to keep the former employees off the list of owed debtors after the bankruptcy filings were performed rushed and incorrectly.

Bankruptcy is a legal process where a company notifies the courts that it cannot meet it’s standard bills. Instead of going further into debt or acquiring more interest on debts, they create repayment plans and are usually forced to sell off assets.