Celadon Might Sell Texas Facility as Bankruptcy Proceedings Continue
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According to bankruptcy court documents, P.A.M. Transportation Services Inc. is seeking to purchase a trucking terminal and property in Laredo, Texas, that is owned by Celadon Group. The purchase price is $19.8 million, and it would include more than 53 acres, a 130,000-square-foot warehouse and a 37,500-square-foot garage. The site is located less than 20 miles from the U.S.-Mexico border, on Interstate 35.
The automotive industry is an extensive business line for P.A.M. Transportation, and under the new U.S.-Mexico-Canada Agreement, the percentage of automotive parts produced duty-free in North America must increase from the current 62.5% to 75% by 2023. The Office of the U.S. Trade Representative, which negotiated the agreement, says that will increase the number of North American-made parts used in cars and light trucks.
According to its website, P.A.M. Transportation trucks make more than 30,000 border crossings annually.
More on Celadon
Jan. 30, 2020: Ex-Celadon CEO Paul Svindland Gets Same Post at STG Logistics
Jan. 24, 2020: Celadon Reaches Deal to Sell Taylor Express for $14.5 Million
Dec. 16, 2020: Bankruptcy Judge OKs Plan to Keep Celadon’s Taylor Express Operating
Dec. 9, 2019: Celadon Files for Bankruptcy
Dec. 5: Two Former Celadon Executives Charged in Fraud Scheme
Aug. 15: Celadon Gets $165 Million Infusion From Luminus Management
April 29: Celadon Group Sells Intermodal Operations to Bison Transport
April 25: Celadon to Pay $42.2 Million After Admitting to Accounting Fraud
April 22: Celadon Sells Logistics Group, Hopes for Financial Reporting in Fall
Oct. 3, 2017: Celadon Acknowledges Active SEC Investigation
July 13, 2017: Celadon Chairman, CEO Paul Will Steps Down
July 3, 2017: Celadon to Record Impairment Charge in Review of Company’s Value
May 2, 2017: Celadon's Financial Statements Called Into Question
April 25, 2016: Celadon Founder Russell Passes Away
June 23, 2014: Celadon’s Russell Used Hard Work, Luck To Build Large Cross-Border TL Carrier
Celadon shut down and filed for bankruptcy protection in December, and now the Indianapolis carrier is liquidating assets to pay down its multimillion-dollar debt.
Meanwhile, a U.S. Justice Department attorney who is serving as a government trustee in the Celadon bankruptcy has filed an objection to a proposal to pay three Celadon executives up to $900,000 in bonuses as the bankruptcy moves forward.
The proposed bonuses are part of what’s called a Key Employee Incentive Plan or KEIP. According to the American Bankruptcy Institute, “Congress imposed strict limitations on payments made specifically to retain key employees of companies in Chapter 11 bankruptcy,” subjecting those bonuses to court approval, only after those employees “attain certain measurable, difficult-to-reach milestones.”
Trustee Andrew Vara wrote in his objection that Celadon failed to provide “an adequate record that the proposed metrics are truly incentivizing, and that the design of the program is consistent with market compensation for similarly situated participants.”
Vara also was critical of the fact that the bonus plan is under court seal at Celadon’s request, and much of the information is not being made public. He wrote that Celadon “keeps too much information related to the KEIP out of public view, which is inconsistent with congressional intent for the scrutiny of executive bonus programs approved during Chapter 11 cases.”
In a Jan. 7 court filing, Celadon, without identifying the executives, said the company “would be unable to achieve significant value” without the three, and they “possess irreplaceable skills and experience.”
The company also said the final sale of its Hope Mills, N.C.-based Taylor Express trucking division hinges on keeping the three.
Celadon’s attorney said the company was depending on the executives “to make extraordinary efforts to manage and implement a successful wind-down and to maximize distributions to creditors.”
However, it was announced Jan. 28 that former Celadon CEO Paul Svindland is leaving the company and will become Chicago-based STG Logistics’ CEO in March.
It’s not clear if Svindland is one of the three executives who are eligible to receive the bonuses.
An agreement had been revealed Jan. 22 that Taylor Express is set to be sold for $14.5 million to White Willow Holding of Newfields, N.H. Celadon paid $43 million for the regional carrier in January 2015.
Taylor Express has a substantial book of business, including moving products for Lowe’s home improvement chain, which also is based in North Carolina.
White Willow Holding is backed by New York investment firm Luminus Management, which invested more than $160 million in and acquired nearly 50% of Celadon last summer, including refinancing some of its debt in a last-ditch effort to save the company from bankruptcy.
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Svindland was part of Celadon’s management team that was brought in after the previous leadership ran into legal trouble with the Department of Justice and Securities and Exchange Commission. The company paid $44.2 million to settle federal charges and claims of filing false financial statements that concealed losses related to its aging truck fleet.
Just days before Celadon filed for bankruptcy, it was disclosed that the company is being sued for $6.2 million in a breach of contract lawsuit. It is alleged that Celadon and three subsidiaries collected and spent millions in receivables belonging to T.A. Dispatch of Ensley, Ala. The suit charges Celadon used that money to stay afloat in its final weeks of operation.
In April 2019, Celadon announced it had sold its managed transportation and freight brokerage business, Celadon Logistics, to T.A. Services for $60 million. As part of the sale, Celadon’s logistics and trucking divisions were designated as the billing agents to invoice the customers on T.A.’s behalf and to ensure a “smooth transition of purchased assets.”
The lawsuit alleges that Celadon owes T.A. an estimated $4.4 million in receivables it collected but then never passed on. The next hearing in the Celadon bankruptcy case is Feb. 26 in Wilmington, Del.
Celadon ranks No. 38 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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