Historic shipping company closes down in Chapter 7 bankruptcy

A 92-year-old trucking company has permanently shut down and filed for Chapter 7 liquidation.

May 4, 2024 - 18:30

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Historic shipping company closes down in Chapter 7 bankruptcy

The trucking industry has faced significant financial distress since the Covid-19 pandemic ended. Higher costs from increased interest rates and rising inflation cut into shipping company profits and competition tightened as trucking demand declined.

Smaller companies face stiff competition from huge national trucking companies like J.B. Hunt Transport Services (JBHT) , Knight-Swift Transport Services (KNX) and XPO Logistics (XPO) that dominate the industry. The fallout from these economic challenges has led several logistics companies to either file Chapter 11 to reorganize their businesses, or in extreme situations, file Chapter 7 to liquidate.

Companies focused on reorganizing included Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, which filed for Chapter 11 bankruptcy protection on March 13 in the U.S. Bankruptcy Court for the Northern District of Illinois.

Nationwide, which operates with 183 trucks and 171 drivers, listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition.

Freight forwarder company Boateng Logistics permanently shuttered its business as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate. The Carlsbad, Calif., company listed assets up to $50,000 and $1 million to $10 million in liabilities.

Another company, J.J. & Sons Logistics of Clint, Texas, on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

But the top reason for logistics companies filing Chapter 7 is extreme financial distress.

92-year-old shipping company permanently closes

Trucking company Arnold Transportation Services laid off all of its employees and shut down operations five days before filing for Chapter 7 liquidation on April 30.

The Grand Prairie, Texas-based logistics company had been purchased in February 2022 by Mississauga, Ontario-based Pride Group Holdings, which on March 27, 2024, filed for protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada blaming effects from the Covid-19 pandemic for the company's financial crisis.

Pride subsequently filed for Chapter 15 bankruptcy protection on April 1 in the U.S. Bankruptcy Court for the District of Delaware seeking recognition of a foreign proceeding to protect its assets in the U.S. from creditors. Arnold Transportation, however, is not a debtor in the Chapter 15 filing.

Pride said in a declaration by its foreign representative that as the pandemic subsided, demand for trucking services decreased, diesel fuel prices soared, interest rates rose and an oversupply of trucks and truck drivers in North America negatively impacted the trucking industry.

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Arnold Transportation, known for its trademark "The Original Regional Carrier," was established in 1932, according to its social media. It operated independently from Pride, according to an amended declaration by the foreign representative, and the company's liquidity position had been deteriorating since the Chapter 15 filing as its factoring lender discontinued support of the company and certain large customers had ceased doing business with Arnold.

The company shut down business lines, stopped taking new delivery orders and terminated its group medical and prescription drug plan to reduce expenses in April. It also required intercompany advances from Pride to maintain payments for fuel and employee wages and benefits.

The foreign representative pursued a quick asset sale for Arnold, but no bidder emerged with a viable offer that could be completed quickly. With hopes for a sale fading, the company opted for filing Chapter 7 liquidation.

Arnold generated about $170 million in revenue in 2023, according to data from Zippia, but Pride said the company had not been profitable, FreightWaves reported. The debtor listed up to $10 million in assets and $10 million to $50 million in liabilities in its petition.

The debtor reportedly filed a Worker Adjustment and Retraining Notification Act notice on May 1, almost a week after closing down its operations and laid off 157 employees, FreightWaves said.

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