Judge Approves Payout Plan to Former Celadon Employees
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A federal bankruptcy judge in Wilmington, Del., on Jan. 3 gave approval for Celadon Group Inc. to pay $4.6 million to drivers and other employees who were expecting paychecks from the company, which on Dec. 9 shut down and entered bankruptcy.
The order authorizes Celadon to spend $3.4 million for unpaid compensation and termination benefits to its former employees, $900,000 to independent contractors, and $300,000 owed for employee benefits.
While the order authorizes Celadon to pay the owed wages, it does not require the company to pay. The court documents also do not reveal what percentage of total owed compensation the $4.6 million represents.
In December, Indianapolis-based Celadon obtained $11.25 million to wind down its operations and liquidate the company. The court has already authorized the company to spend $5.4 million on its shutdown.
More on Celadon
Dec. 9: Celadon Files for Bankruptcy, Shuts Down
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 has closed 25 of its 26 operating units. It is trying to sell the last of its operating units — Hope Mills, N.C.-based Taylor Express Inc. — to help pay down its debt, which is estimated at $391 million. Two business bidders have expressed interest in the 160-truck fleet.
A court-approved plan crafted by the company gives Celadon until the end of January to secure final approvals for sale of its remaining assets.
Another hearing on the case is scheduled for Jan. 30.
Celadon in its bankruptcy petition listed assets of $427 million and debt of $391 million. The company owes $42.2 million in fines the company agreed to pay to the U.S. Department of Justice to settle allegations of accounting fraud levied against the company’s prior management.
Just days before Celadon shut down, the Securities and Exchange Commission and federal prosecutors charged two former top executives for their alleged participation in an accounting fraud in 2016 and 2017 that inflated the company’s income and earnings per share.
In addition to the SEC civil complaint, the U.S. Attorney’s Office for the Southern District of Indiana and the Department of Justice also filed criminal charges against the defendants for related misconduct. The Justice Department said the scheme resulted in a loss of more than $60 million in shareholder value.
The former executives were charged with:
- One count each of conspiracy to commit wire fraud, bank fraud and securities fraud.
- Five counts of wire fraud.
- Two counts of securities fraud.
- One count of conspiracy to make false statements to a public company’s accountants and to falsify books, records and accounts of a public company.
- One count of making false statements to a public company’s accountants.
The SEC civil complaint alleges that the former officials attempted to conceal losses by engaging in the scheme to buy and sell trucks at inflated prices — in some cases double or triple their fair market value.
In July, a new management team was brought in to try and save the company after the accounting issues were disclosed.
In its Dec. 9 bankruptcy announcement, the company’s current leadership said several factors contributed to the decision to liquidate.
“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,” CEO Paul Svindland said. The New York Stock Exchange in 2017 delisted Celadon after the company failed to submit quarterly and annual reports, as required by SEC.
Caldon Court Document by Transport Topics on Scribd
Before the bankruptcy filing, Celadon was planning to file financial statements dating to February 2017 and amend those as far back as June 30, 2014.
The Federal Motor Carrier Safety Administration’s registry listed Celadon as having 2,771 power units and 2,553 drivers as of Oct. 25.
Celadon ranks No. 38 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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