12 more freight carriers go bankrupt amid lender pullback

Twelve more trucking companies filed for Chapter 11 bankruptcy in October, highlighting the embattled transportation finance sector.  

These freight carriers filed for Chapter 11 last month, according to U.S. Bankruptcy Court documents obtained by Equipment Finance News: 

• G1 Transport filed Oct. 3 in the Northern District of Georgia; 
• GEC Transport Solutions filed Oct. 6 in the Southern District of Texas; 
• Hadnot Logistics filed Oct. 29 in the Northern District of Texas; 
• IH 35 Transportation filed Oct. 2 in the Southern District of Texas; 
• Mister M&K Trucking filed Oct. 17 in the Western District of Texas; 
• Propel Trucking filed Oct. 2 in the Eastern District of Arkansas; 
• R&R Transport & Logistics filed Oct. 9 in the Southern District of Texas; 
• Ricky Sellers Trucking filed Oct. 23 in the Southern District of Alabama; 
• Styx Logistics filed Oct. 9 in the District of Nevada; 
• Supra National Express filed Oct. 28 in the Northern District of Illinois; 
• Titan Group Logistics filed Oct. 30 in the Central District of California; and 
• VIB Trans filed Oct. 28 in the Northern District of Illinois; 

The 12 filings were the most in a month since EFN began tracking bankruptcies at the start of the second quarter, edging past the 10 filings in September. Tightened lending standards continue to exacerbate financial stress in the freight industry, dealing a blow to OEMs and dealers as well. 

Even for major truck dealers such as Rush Enterprises, “financing remains a challenge for many buyers,” Chairman and Chief Executive W.M. “Rusty” Rush stated in the company’s Oct. 29 earnings release, noting the “increasing number of bankruptcies of small carriers.” 

Banks retreat 

While many lenders tighten credit standards in the transportation sector, others are exiting the space altogether. Midland States Bancorp, for instance, stopped financing equipment on Sept. 30, citing credit issues “primarily in the trucking industry.” 

In the Ricky Sellers Trucking filing, Midland States Bank has an unsecured claim of roughly $172,000 in a lawsuit tied to a truck.  

BMO Bank is claiming nearly $900,000 in unsecured funds for six trucks in the Propel Trucking filing. The bank’s parent, Bank of Montreal, is exploring the sale of its transportation finance arm. 

M2 Equipment Finance, another bank subsidiary that has discontinued new loans and leases, was also affected by the Ricky Sellers filing, with an unsecured claim of $79,000 tied to a Peterbilt truck. 

Thorough auditing key 

Lenders in the transportation sector must conduct a thorough audit of a business to mitigate risk and identify creditworthy applicants, Eduardo Cruz, president of Addison, Texas-based Commercial Equipment Financing, told EFN.  

A thorough audit helps lenders determine an applicant’s “roots and resourcefulness,” which is especially important given the challenging and unpredictable nature of trucking, Chris Grivas, president of Chadds Ford, Pa.-based CAG Truck Capital, told EFN. In fact, roots and resourcefulness, or the ability to take care of collateral and navigate setbacks, may factor into a lender’s underwriting more than credit history, he said. 

“I’ve never seen a credit score drive a truck.”

— Chris Grivas, president, CAG Truck Capital

Constant communication after loan approval is also crucial to avoiding defaults and providing flexible financing accordingly, Cruz said. 

“I’m going to call, I’m going to follow up, I’m going to email, I’m going to text until I get a response,” he said.  

Check out our exclusive industry data here.