Four more transportation firms filed for bankruptcy in the past several days, with multiple equipment lenders claiming more than $100,000 each in unsecured funds.
The following freight companies filed for Chapter 11 protection, according to U.S. Bankruptcy Court documents obtained by Equipment Finance News:
- Contract Managed Services filed June 14 in the Western District of Kentucky, with assets between $500,000 and $1 million and liabilities between $1 million and $10 million;
- Dolche Truckload filed June 15 in the Northern District of Illinois. Assets and liabilities both range between $1 million and $10 million;
- GD Transport filed June 16 in the Middle District of Florida. Assets and liabilities both range between $1 million and $10 million; and
- Integral Express filed June 15 in the Northern District of Illinois. It has $500,000 to $1 million in assets and $1 million to $10 million in liabilities.
At least 17 transportation firms have filed for Chapter 11 in the second quarter, indicating an industry that’s still feeling the effects of a yearslong recession, exacerbated by economic uncertainty and a tight lending climate.
M&T Bank, Daimler Financial among creditors
The Dolche Truckload filing shows that M&T Bank has roughly $905,000 in unsecured claims tied to nine Freightliner trucks and one Volvo truck, with another claim of nearly $45,000 tied to nine Wabash reefer trailers. Dolche also owes $121,620 to Daimler Financial Services for nine Freightliners.
M&T Bank could not be reached for comment.
Other creditors affected by the recent filings include CIT Bank, which has two unsecured claims totaling $150,000 for three trucks financed to Integral Express. However, Integral has agreed to surrender the two trucks in the $80,000 claim, according to its filing.
For especially large unsecured claims that involve multiple assets, identifying the condition and location of collateral is crucial for negotiations between creditors and debtors, Sara Costanzo, a shareholder and creditor rights attorney at Weltman, Weinberg & Reis, told EFN.
“We need to know exactly where they are,” she said. “Are they in use? Are they in transit? What was the operation of those vehicles? So, if you’re not reaffirming, and we’re not sure that the collateral even exists, that it hasn’t been wrecked, then we will seek relief from stay in the bankruptcy court.”
Equipment lenders can repossess the collateral once a motion for relief of stay is granted by a judge, she said.
Repossessions spike in medium-duty space
A surge in repossessions contributed to a 25.8% year-over-year increase in used medium-duty truck inventory in May, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told EFN. A chunk of these repossessions stemmed from small freight companies that have either filed for bankruptcy or ceased operations, Ryan said.
“There’s a lot of voluntaries right now in that space to where they just can’t make it work,” he said. “The money’s not there. And working to break even isn’t going to be sustainable”
Many lenders are steering clear of the transportation equipment sector partly because of bankruptcies, repossessions and other signs of financial stress since the freight recession, he said.
