Trucking Bankruptcies: Why Falcon Transport, New England Motor Freight, And Celadon Closed Their Doors

Last year was a challenging year for the trucking industry. As many as 640 trucking companies filed for bankruptcy, leaving thousands of drivers without a job, according to transportation data from Broughton Capital LLC (via The Wall Street Journal). Here’s a look at some of the biggest players that left the trucking industry in 2019.

Falcon Transport was a casualty of the trucking industry. The trucking company closed its doors in April 2019, reportedly leaving 585 drivers without work. The reported cause of the trucking firm’s demise was a connection to General Motors Lordstown Assembly plant in Ohio, which closed in March 2019. Falcon was a flatbed operator and was once considered the largest in the U.S. in its niche.

New England Motor Freight also felt the hit in 2019 as it filed for bankruptcy in February of the same year. The trucking giant closed its doors, leaving 1,472 drivers without a job. With millions owed to creditors, the firm felt the pinch after toll prices increased, excessive regulations were enacted, and insurance premiums rose, Business Insider reported.

“We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant,” Vincent Colistra, senior managing director at Phoenix Management Services, LLC, and chief restructuring officer at New England Motor Freight said in a statement.

“Following two years of losses, and with continuing and unsustainable rises in overhead as well as a severe industry shortage of drivers, we have concluded that the Company has no choice but to proceed with an orderly wind-down of operations in a Chapter 11 proceeding,” he added.

More recently, Celadon Group filed for bankruptcy, closing down its operations and ending the livelihood of 2,880 drivers in the U.S. and Canada. In addition, as many as 1,300 administrative employees lost their jobs – all just weeks before the holidays, the news outlet said.

Only three days prior to filing for bankruptcy, two former Celadon executives were charged by the SEC for accounting fraud, claiming that they inflated the income and earnings of the trucking company.

"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 in a statement at the time.

"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."