U.S. trucking suffered another major blow as industry giant Celadon announced it filed for bankruptcy after two former executives were charged for a years-long accounting scheme, leaving around 3,000 truck drivers jobless heading into the holiday season.
It could become the largest truckload bankruptcy in history, according to FreightWaves, one of the industry’s top publications. It’s a huge turn of events for the Indianapolis-based company that grossed $1 billion just four years ago.
Celadon (OTCMKTS: CGIP) sent an internal message announcing the Chapter 11 filing in the wee hours Monday morning, reassuring truck drivers around the nation that all deliveries in progress would be made, and drivers don’t have to worry about being stranded away from home. Around 2,500 drivers are employed by Celadon, and another 380 owner-operators work with the company.
Here’s the full text from the message, per Business Insider:
** Fleetwide message: We regret to inform everyone that Celadon Group Inc. has filed for a Chapter 11 bankruptcy. We will continue to haul and deliver all loads that we now have in transit. We will have more information in the morning as to where equipment needs to be returned to.
We have been assured that everyone who follows instructions will be paid for the work and miles assigned and completed, and Celadon will not leave anyone stranded away from home.
Finally, we truly appreciate your commitment and dedication to this company, and wish you all luck moving forward.
Drivers aren’t the only ones affected, either. Around 1,300 administrative workers, mostly based in Celedon’s Indianapolis headquarters, are now without jobs as the holiday season ramps up.
The filing shows that Celadon will pay $3.9 million in unpaid wages to its 3,800 employees, and it’s also paying $1 million in termination bonuses, which is a paltry $267 per worker.
Despite Celadon’s reassuring message to drivers and employees, some truckers have reported their Comdata fuel cards have already been deactivated. While drivers may eventually be reimbursed, every visit to the pump costs between $400 and $600 — no small amount to front.
This is only the latest in a string of bankruptcies that have rocked the trucking industry, which entered a recession earlier this year. The $800 billion dollar industry witnessed around 640 companies go bankrupt in the first half of 2019, which is over triple the 175 companies that filed in the same period of 2018.
Cummins, the largest producer of Class 8 truck engines with a 38% market share last year, is laying off around 2,000 workers amid plummeting demand for new trucks.
But the writing was on the wall for Celadon. Two former executives for the company were charged Thursday for an accounting scandal that spanned multiple years. Shares in the company dropped to $0.41 Friday following the news.
The bankruptcy sank shares even further to less than $0.03 Monday around 1 p.m. EST.