Recently, four more transportation companies have declared bankruptcy, with several equipment lenders each claiming over $100,000 in unsecured debts.
The following freight firms sought Chapter 11 protection, as reported by U.S. Bankruptcy Court documents accessed by Equipment Finance News:
Contract Managed Services filed on June 14 in the Western District of Kentucky, reporting assets between $500,000 and $1 million and liabilities between $1 million and $10 million;
Dolche Truckload filed on June 15 in the Northern District of Illinois, with both assets and liabilities ranging from $1 million to $10 million;
GD Transport submitted its filing on June 16 in the Middle District of Florida, with assets and liabilities also between $1 million and $10 million;
Integral Express filed on June 15 in the Northern District of Illinois, having assets of $500,000 to $1 million and liabilities of $1 million to $10 million.
This marks at least 17 transportation companies that have entered Chapter 11 in the second quarter, demonstrating an industry still grappling with the long-lasting effects of a recession, intensified by economic instability and a restrictive lending environment.
Creditors: M&T Bank and Daimler Financial
In the Dolche Truckload case, records indicate that M&T Bank has approximately $905,000 in unsecured claims associated with nine Freightliner trucks and one Volvo truck, plus another claim of nearly $45,000 linked to nine Wabash reefer trailers. Dolche also owes Daimler Financial Services $121,620 for nine Freightliners.
Other impacted creditors include CIT Bank, which holds two unsecured claims totaling $150,000 for three trucks financed to Integral Express. Integral has consented to surrender two trucks related to an $80,000 claim, as per its filing.
For significant unsecured claims involving multiple assets, understanding the condition and location of collateral is essential for negotiating terms between creditors and debtors, according to attorney Sara Costanzo. “We must ascertain their status: Are they operational? In transit? How are they being used? If collateral existence is uncertain, we will pursue relief from stay in bankruptcy court,” she explained.
Increase in Repossessions in Medium-Duty Trucks
A rise in repossessions has led to a 25.8% year-over-year growth in used medium-duty truck inventory as of May, according to Jim Ryan from Sandhills Global Equipment Lease and Finance. Many repossessions have resulted from small freight companies filing for bankruptcy or shutting down.
“Many are voluntarily giving up in that sector because they can’t sustain operations,” Ryan noted. “The financial resources are lacking, and merely breaking even isn’t feasible.”
Numerous lenders are avoiding the transportation equipment market due in part to the bankruptcies, repossessions, and other indicators of financial distress stemming from the freight recession.
