(WTTV) — There’s an earthquake hitting the North American trucking industry, and its epicenter is at 9503 East 33rd Street in Indianapolis at the headquarters of Celadon Group Inc.
In what may be the largest trucking industry bankruptcy ever recorded, Celadon is seeking Chapter 11 reorganization listing $427 million in assets, $391 million in debts including a huge restitution payment of $33 million owed to the federal government as the result of a probe into a fraud scheme that investigators charge cost shareholders and investors $60 million due to the overvaluation of Celadon trucks.
The news means 4,000 employees will be losing their jobs and 3,300 trucks and 10,000 trailers will stop rolling.
In a prepared statement, Celadon Chief Executive Officer Paul Svindland said the trucking leader based on Indianapolis’ east side ran out of options to continue operations because, “A number of legacy and market headwinds made this impossible to achieve. 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.”
“The company was a good company,” said driver Michelle Sloan as she waited in the rain outside of Celadon’s headquarters for a bus ticket to send her home to Pittsburgh. “For one person or a few people that decided to be greedy or whatever, they screwed a whole lot of people.”
Last week, U.S. Attorney for the Southern District of Indiana Josh Minkler announced that former Celadon Chief Operating Officer William Eric Meek and former Chief Financial Officer Bobby Lee Peavler where charged with conspiracy to commit wire fraud, bank fraud and securities fraud, along with other counts, for allegedly concealing the diminishing value of Celadon’s truck fleet, making it appear the company was worth more to investors than its actual value.
The unraveling of the alleged scheme comes as the North American trucking industry is in a slump.
Industry analysts report that 640 trucking firms declared bankruptcy during the first half of this year as freight volumes have declined for eleven straight months and the market has been in a recession.