The Trucker 060120

THETRUCKER.COM
Business
May 15-31, 2020 • PB
Business
June 1-14, 2020 • 19
As repercussions of Celadon bankruptcy case continue behind
the scenes, asset acquisitions and auctions go on amid pandemic
Kris Rutherford
krisr@thetruckermedia.com
The aftermath of the closing and subsequent
bankruptcy filing of Indianapolis-based carrier
Celadon made for prominent headlines in trucking
industry news from December 2019 until late
February 2020.
But that was before COVID-19 supplanted
almost all news coverage ranging from major
media outlets to industry-specific publications
and digital media. The fallout from the
Celadon bankruptcy continues, but those not
following the story may have lost track of
the complicated proceedings in a case involving
multiple subsidiaries in numerous states
and three countries. While proceedings may
be moving a bit slower than usual during the
global health crisis, plenty of action is ongoing
behind the scenes.
Celadon, among the largest carriers in the
U.S. and the largest serving the U.S., Canada and
Mexico, abruptly ceased operations without notice
to employees over the weekend of Dec. 7-8,
2019. After sending announcement to drivers via
the carrier’s in-cab messaging system shortly before
midnight on Dec. 8, Celadon filed for bankruptcy
just hours later.
In the meantime, the carrier’s actions stranded
drivers across the three countries. Fuel companies
canceled driver cards, and reports indicated
some equipment was repossessed. The
initial confusion eventually cleared, and all drivers
returned home with the assistance of other
carriers and businesses. It then became apparent
that Celadon’s Chapter 11 filing would spark the
most significant truck carrier bankruptcy proceedings
in U.S. history.
The following is a summary of significant
developments in the Celadon bankruptcy and
wind-down since late February.
PAM abandons acquisition of Celadon’s
Mexico assets; new buyer found
In February, Arkansas-based carrier PAM
announced an agreement with Celadon’s bankruptcy
oversight team to acquire the former carrier’s
Mexico-based operations at the cost of
$7 million. As an intracontinental carrier, before
its bankruptcy Celadon managed several
holdings in Mexico, including 100% of Celadon
Mexicana and Jaguar Logistics & Leasing
Servicios. The company also controlled 75% of
Transporación Corprativos. The agreement included
Mexico tax refunds due to Celadon for
approximately $18.5 million.
Following PAM CEO David Cushman’s retirement
on May 1, reports emerged that PAM
sought to renegotiate the terms of the agreement.
The reports suggested the unforeseen impacts
of COVID-19 on the trucking industry —
and PAM operations — had created new market
conditions. Celadon’s representatives showed
no interest in renegotiating the deal and instead
sought another buyer.
White Willow Holdings of Newfields, New
Hampshire, back by New York City investment
firm Luminus Management LLC, provided
the most viable offer for the Mexico assets. In
early May, a press release announced the New
Hampshire carrier would acquire Celadon’s
Mexico business for $2.7 million. Terms included
the $18.5 million in Mexico tax refunds
and a commitment on the part of While Willow
Holdings to invest $550,000 in the Mexico
operations immediately. Assets included in the
transaction included all former Celadon holdings,
the most prominent being Jaguar Logistics
Courtesy: Richie Brothers Auctioneers
More than 300 trucks and 1,400 trailers are included in auctions of Celadon assets coordinated
by Ritchie Brothers Auctioneers of Houston.
& Leasing, previously valued at $23.4 million.
White Willow is no stranger to the Celadon
proceedings. The company purchased Celadon’s
North Carolina-based carrier Taylor Express earlier
this year at the cost of $14.5 million.
Celadon spin-off assets acquired in a joint
venture
A joint venture including Chicago-based Hilco
Global and New York City’s Colbeck Capital
Management acquired assets associated with a
former Celadon truck leasing affiliate on May 1.
The terms of the agreement were not disclosed.
Former Hilco Performance Solutions president
Steven Tanzi is CEO of the new venture to be
known as H19 Capital LLC. H19 Capital should
not be confused with 19th Capital, a similar joint
venture between Celadon and Toronto-based Element
Fleet Management Corp.
When Celadon formed Quality Companies
See Celadon on p21 m
iStock Photo
April’s declining truck sales were not unexpected,
as numbers were already running
nearly 28.0% behind last year’s pace.
April Class 8 truck sales barely half of those a year ago
Cliff Abbott
cliffa@thetruckermedia.com
April was the worst month for new Class 8
truck sales in the U.S. market in more than three
years. To find a worse month, you’d have to go
back 37 months to February 2017.
A total of 12,986 new Class 8 trucks were
sold in April, according to information received
from ACT Research (actresearch.net), a decline
of 47.6% from the 24,480 sold in the same month
of 2019. April sales dropped 23.1% from 16,892
sold in March.
Of those trucks sold this April, 8,156 were
fifth-wheel-equipped tractors, down 30.1% from
March sales of 11,673 and down 25.5% from
April 2019 sales of 18,303.
The remaining 4,830 trucks, or 37.2%, were
vocational units equipped with dump, refuse or
other bodies. The percentage of vocational trucks
is typically 25% to 30%, so the higher percentage
in April indicates that sales of over-the-road
trucks are taking a bigger beating than sales of
vocational trucks. The April number was 7.5%
lower than March sales and 25.5% lower than
April 2019 sales.
The declining sales were not unexpected, as
numbers were already running nearly 28.0% behind
last year’s pace. A condition of overcapacity
in the freight market and uncertainty over economic
conditions had already combined to put a
damper on the market.
Then came COVID-19.
The closing of overseas manufacturers
slowed imports; then the shutdown of domestic
businesses deemed “nonessential” depressed
available freight levels to crisis proportions.
May sales aren’t expected to be much better,
if at all, despite the gradual relaxing of stay-athome
orders and the reopening of businesses.
That’s because of the time it takes to restart an
economy that has been virtually shut down.
“It takes a lot of people marching at the same
speed to turn the manufacturing sector back on,”
said Kenny Vieth, president and senior analyst at
ACT Research, noting that, even though a plant
may reopen, the parts and materials needed to
function may not be readily available.
“With current inventories and supply chains,
we can say that April will probably not be the
‘bottom’ of the economic downturn,” he said.
In the used Class 8 truck market, sales volumes
declined 8% in April compared to March, according
to the latest preliminary release of State of the
Industry: U.S. Classes 3-8 Used Trucks published
by ACT Research. Average prices for used tractors
in dealer-to-dealer sales also fell 8%, while the average
used truck sold was 2% older. Compared to
April 2019, average prices were down 20%, while
the age of the average truck dropped 5% and the
odometer miles declined 2%.
As for new trucks, the manufacturer that
has taken the biggest hit so far in 2020, on a
See Sales on p21 m