Celadon Files For Bankruptcy: Did Executive Fraud Charges Cause The Trucking Giant’s Demise?

Trucking giant Celadon Group (CGIP) filed for Chapter 11 bankruptcy on Monday, just days after two of its executives were charged in a $60 million fraud scheme. The bankruptcy filing also affected 25 affiliate entities.

The bankruptcy filing puts nearly 4,000 employees out of work, as the trucking company immediately closed all of its operations on Monday. However, the shutdown does not include its Taylor Express headquarters in North Carolina as the company said the location will continue to operate as it explores the possibility of a sale.

The Chapter 11 bankruptcy signals a winddown of Celadon’s global operations, which will be supported by incremental debtor-in-possession financing by its lenders, the company said.

"We have diligently explored all possible options to restructure Celadon and keep business operations ongoing, however, a number of legacy and market headwinds made this impossible to achieve,” Paul Svindland, CEO at Celadon, said.

“Celadon has faced significant costs associated with a multi-year investigation into the actions of former management, including the restatement of financial statements. When combined with the enormous challenges in the industry, and our significant debt obligations, Celadon was unable to address our significant liquidity constraints through asset sales or other restructuring strategies.

“Therefore, in conjunction with our lenders, we concluded that Celadon had no choice but to cease all operations and proceed with the orderly and safe wind down of our operations through the Chapter 11 process,” Svindland added.

Last week, Eric Meek, former chief operating officer at Celadon, and Bobby Lee, Peavler, former chief financial officer of the company, were charged with nine counts including conspiracy to commit wire and securities fraud, conspiracy to make false statements to the company's accountants and falsify records for allegedly concealing millions in losses from shareholders and lenders, the Indy Star reported. If convicted Meek and Peavler face decades in prison, the news outlet said.

Celadon was known as the largest international trucking provider in North America. The company reportedly had about 3,330 tractors and 10,000 trailers.

Shares of Celadone stock were down 91.22% as of 11:36 a.m. EST on Monday.