Accounting Fraud & Freight Recession Topple Celadon, Largest Truckload-Carrier Bankruptcy in US History

Creditors trying to repossess trucks over the weekend. Thousands of drivers on the road, some stranded. Employees left in the dark. Shares plunge 93% this morning from nearly nothing to practically nothing.

By Wolf Richter for WOLF STREET.

Celadon Group, one of the larger full-truckload operators in the US with about 3,000 drivers and about 2,700 tractors, said today – confirming days of rumors – that it filed for Chapter 11 bankruptcy and is ceasing operations. This is the largest truckload carrier ever to file for bankruptcy in US history.

The drivers, hauling loads across the US, Canada, and Mexico were apparently among the last to be informed. According to Freight Waves, they received this message in the middle of the night on their telematics devices:

“Fleetwide message: We regret to inform everyone that Celadon Group, Inc. has filed for a Chapter 11 Bankruptcy. We will continue to haul and deliver all loads that we now have in transit. We will have more information in the morning as to where equipment needs to be returned to.

We have been assured that everyone who follows instructions will be paid for the work and miles assigned and completed, and Celadon will not leave anyone stranded away from home. Finally, we truly appreciate your commitment and dedication to this company, and wish you all luck moving forward. Celadon Management.”

Other employees were told to attend a meeting this morning at the headquarters in Indianapolis.  Celadon said its North Carolina-based Taylor Express would continue to operate.

The company’s shares [CGIP] plunged 93% this morning from nearly nothing (41 cents on Friday) to practically nothing (2.7 cents) at the moment. The stock had been delisted from the NYSE last year and is trading over the counter.

Celadon CEO Paul Svindland said in the statement reported by the Wall Street Journal: “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.”

These “headwinds” are multiple and include a federal investigation into accounting fraud, filing fake financial statements, and lying to auditors to hide its losses mostly at its truck leasing business, Quality Companies LLC, leading up to 2016.

In April 2019, the company agreed to settle these allegations for $42.2 million. Among its debts in the bankruptcy filing are $33 million it still owes the Justice Department. And last week, its former chief operating officer and chief financial officer were indicted on allegations of fraud.

The last quarters for which the company has filed financial statements were in 2016. But these are the fake financial statements, and the company has been working on restating these financial statements going back to 2014. So it has been hard to figure out for investors what is going on.

In terms of revenues for 2018, even when the rest of the industry was awash with business during the historic freight boom that peaked in the summer of 2018, Celadon’s revenues fell 11% year-over-year to $762 million, according to SJ Consulting cited by the WSJ. But that boom ended in the last quarter of 2018, and a freight recession has since set in, putting even more pressure on Celadon.

So far this year, the freight recession and other issues have knocked over hundreds of smaller trucking companies and a few regional ones that had already been having trouble. According to transportation data firm Broughton Capital, cited by the WSJ, trucking company failures more than tripled over the first three quarters of 2019 compared to the same period in 2018, to 795 shutdowns. Most of them were small or mid-size. But it also included regional carriers, such as New England Motor Freight which collapsed in February, and major car-hauler Jack Cooper which filed for Chapter 11 bankruptcy in August.

Since the end of Q3, the surge of bankruptcy filings has continued, including family-owned Hendrickson Truck Lines in California, with about 90 trucks and 97 drivers, which filed for bankruptcy at the end of November.

But each time a trucking company ceases operations, such as Celadon, it takes some capacity off the road, in an industry that currently struggles with overcapacity. And the remaining carriers benefit by picking up the business

Freight Waves reported that competitors are reaching out to Celadon’s drivers with offers to assist them and expressing interest in hiring them, and they will likely find jobs in the industry. Employees at Celadon’s headquarters in Indianapolis are going to face the local job market.

Celadon’s difficulties came to a head last week, according to FreightWaves:

  • On December 5, amid wild rumors, lenders were reportedly repossessing equipment from Celadon.
  • On December 6, a source told Freight Waves about the impending bankruptcy filing.
  • On December 7, Friday, Celadon started informing its largest customers to find other carriers but left its own employees in the dark. In the evening, Celadon’s customer service staff found out from customers and driver managers from drivers that Celadon was in trouble.
  • By that time, FedEx and others had already cut the company off. Walmart, MillerCoors, and Conagra started to cancel pre-planned loads.
  • Over the weekend, Comdata shut off fuel cards, and FreightWaves “heard reports from other carriers’ drivers who witnessed Celadon trucks being repossessed and towed away from truck stops.”

November was supposed to be the second month in what would be the upturn from the historic collapse in 2019 of orders for heavy trucks. But instead, orders plunged again. Read…  Trucking “Thrives on Stability, But We’re Now on a Rocky Road”

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  58 comments for “Accounting Fraud & Freight Recession Topple Celadon, Largest Truckload-Carrier Bankruptcy in US History

  1. So the recession begins. The companies still operating might be reluctant to pick up the drivers and the equipment, until the effect has had enough time to put price pressure on shipping rates. I suspect there are not enough independents in this space to take up the slack.

    • Ganja says:

      It is the opposite. Good drivers will be picked up. Celadon was mismanaged. Pricing will.improve.
      There is absolutely no chance this leads to a recession. Too small to matter

    • nick kelly says:

      The driver finds out from the customer he’s SOL or even has his rig (also I guess his ride) seized at a truck stop.
      This outfit was a class act right to the end.

  2. RD Blakeslee says:

    Wolf, are all the trucking companies combined that have been knocked off large enough in total economic size to cause a recession?

    • tom says:

      Nope. Not even close.
      Better yet, maybe a article on Amazon Freight. With $$$ to burn
      the trucking industry had better pucker up.

    • TNLGX says:

      Has the Fed mentioned anything about a recession. In the past they have used Trucking as a barometer of the Nations’ health. Here on the East Coast Parcel Shipments are bazonkas. Of course due to the seasonality. Mr. Russell the Founder of Celadon must be rolling in his grave.

    • Wolf Richter says:

      RD Blakeslee,

      Services — financial, healthcare, professional, etc. — are 70% of the economy. They’re doing mostly fine. So trucking doesn’t reflect the demand for services. Trucking itself is a service, but not a huge part, and shutdowns of individual companies don’t change the demand for transportation services. In terms of layoffs by trucking companies, the shutdown companies don’t employ enough people to where it makes a dent into the overall economy. And for now, the laid-off good drivers will find jobs at other trucking companies.

      For now, there is a sector shakeout going on amid overcapacity. This doesn’t reflect recession dynamics.

      • RD Blakeslee says:

        Thanks, Wolf

      • Deanna Johnston Clark says:

        For anyone and family affected by this awful mess, just before Christmas, I want to say we here are very sorry…
        This has 2008 written all over it…with Dads gathering their family at McDonalds to tell them college is over, their lifestyle is over, the big wedding is over this summer…..a new day begins.
        God bless all of them and bring them a better New Year.

    • When a large company files for bankruptcy you may assume business is not good. Unlikely trucking “causes” a recession, they ship when someone orders. Consumer confidence is a lagging indicator, and things like gasoline, and healthcare premiums count as consumer spending. If you want to take the jobs report apart, try the JQI. Looks like Dirty Dick Dart was reaching out to the drivers, who are stranded. Their website had a mix of employee reviews. Things getting chippy

  3. Johnny says:

    There is no recession that will occur because of this.
    Celadon and other small truckers are often poorly managed and over regulated. Pricing will improve short term. Anyone who believes this is indicative or will lead to a recession is wrong.

    • Mike says:

      Over-regulated is correct.

      It really is sad every time the government gets involved in an industry it becomes over-regulated and the barriers to entry become ridiculous for any small players. Though Caledon may be a victim of accounting fraud there are many smaller trucking firms that are gone because of increased government regulations.

      • Wisdom Seeker says:

        Celadon, as a corporate person, is not a “victim” of accounting fraud, but a perp. Put them under. Let the good people (real people!) find better work at companies that aren’t criminal enterprises. Let the individuals within Celadon who destroyed the company rot in jail or head towards the fate they have earned by destroying so many others’ lives, all for a temporary illusion of wealth.

        • Brant Lee says:

          Don’t you wish the government would have let that happen to the criminal enterprises known as BANKS during the last recession?

        • Wisdom Seeker says:

          @Brant: Exactly. The criminal banks should have been thru what I call “Decap and Recap”.

          Corporate crime needs a punishment stronger than “profit-sharing-with-the-government” fines. Criminal Corporations should be subject to “Decap and Recap” punishment: (1) Decapitate the company – fire the C-suite and the board. (2) Recapitalize it – Automatically fine the company enough to Zero the shareholders (force bankruptcy) AND bondholders, and let fresh ownership step up to recapitalize the company if it’s still capable of earning a profit.

          Worst-case offenders should be given a corporate death penalty.

          And no company is ever “too big too fail” – those are too big to exist and MUST be broken up. So antitrust law needs to be properly enforced: the research shows one needs at least 10 participants in all “interstate commerce” lines of business to prevent pricing collusion, so any company in excess of 25% market share needs to be broken up (or capped) to ensure adequate competition.

          Antitrust enforcement needs to also be extended to the level of underlying ownership: can’t have a few entities cross-owning multiple companies in the same line of business.

          Drain the damn swamp already.

        • Dan Grinnell says:

          Wisdom Seeker, excellent comment. “The Company” is the one at fault, the perp, not the drivers or other workers, except for management. I think it’s high time this country eliminates the “LLC” shit, and holds managers AND stockholders liable for any screwups. Stockholders a bit less as they may be getting lied to, as I’m sure is the case here with Celadon.

      • weinerdog43 says:

        “Over-regulated is correct.”

        Absolute nonsense. 18 wheelers cause far and away the most damage to our public highways, yet we all have to subsidize them via fuel taxes. Further, an 80,000lbs vehicle traveling at highway speed can do catastrophic damage to everything else sharing the road with them.

        The fact that these vehicles are subject to “regulations” is healthy. I’ll happily take our regulated streets and highways as a trade off for public safety.

        • Nodak65 says:

          weinerdog43: I was going to be a lot harsher in my reply but the trucking industry as a whole pays a “HUGE” amount in taxes just to drive(fuel permit just to by diesel in each state) on the roads you complain about!! Also the roads are supposed to be built to handle those Loads these trucks haul that is why we have weigh stations to ensure compliance??? Also the “I” were built for federal commerce and defense purpose!! And get a lot of federal $$. So if you are mad about the taxes for highways not being maintained I suggest you contact your CONGRESSPERSON and see where your road taxes are actually being spent!!!! I’m not a Trucker by profession but I respect the trucking industry and depise the little yugo crowd (you) who think you own the roads…..

        • Wolf Richter says:


          “…I … depise the little yugo crowd (you) who think you own the roads…..”

          Personal attacks on commenters you disagree with are inappropriate here. Commenting guidelines 5 & 6.

        • Richard says:

          I’m a civil engineer and you are more correct. The commenter Nodak65 is mostly incorrect when he says that roads are designed for trucking loads.

          Yes the roads are designed to handle truck loads, but the truck loads in general are the main cause of wear & tear on the roads, and the primary reason they need to be re-built every 20-30 years.

          Im in full agreement that trucks should be regulated to prevent overloading of the roads, because you don’t want to exceed the per axle weights the roads are designed for. The roads aren’t designed with much wiggle room.

          In addition, I’m in full agreement that trucks should bear the brunt of vehicle taxes & fees (which would be passed into consumers with high prices) since they are the primary reason roads need to be replaced so often. Cars traffic is directly subsidizing truck traffic and that’s just bad tax policy, in my opinion.

        • As a semi driver I hated routes on secondary roads. The curves are tight, edges of the road are soft, and not properly crowned or banked. The grades on a main highway are set to maximum steepness at 2/3s of incline, If you can get keep momentum past that point you shouldn’t need another shift. Secondary roads can have any grading, the engineers typically follow the contours of the land. Then you meet a logger running 20k over taking their half in the middle being paid by the board foot not the hour. A lot of hauling is done on secondary roads. It’s dangerous for everyone involved. As a driver “regulated” streets are my preference as well.

      • The Rage says:

        over regulated they are not. debt based scams like anything to do with capitalism, they are. keep on spouting the pyramid scheme.

        • James says:

          As a truck driver DOT and other regulatory orgs are my friends. The industry is overfilled with what is known as “throw away drivers.” The more regulation the safer the public is. Your “mu’h GDP” argument doesn’t override that. Go to Mexico if you want unregulated trucking industry. My guess is most folks won’t and that’s the difference.

  4. weinerdog43 says:

    Thanks Wolf.

    This is (was) a big operation. If you traveled I-35; I-55; or I-65, you couldn’t help but see their trucks. As Wolf has been frequently noting, the trucking industry has been struggling lately, but Celedon was doing worse than most. Of course, having management defraud the drivers, customers and investors doesn’t help much either.

  5. Prairies says:

    This bankruptcy is way worse in amount of money lost compared to the one I read this morning. Tlicho Investments had to bury a couple trucking companies that supplied fuel and food to some of the NWT communities.

    The waves keep coming, not sure how much more the dam can hold.

    • Sigfried and Roy says:

      Let’s keep perspective. 3000 drivers (Celedon) represents less than 1/10 of one percent of USA truck drivers. As a company, Celedon represents 0.000002% of USA Commercial Trucking Companies. (per FMCSA, which says there are 500,000+ CTC’s). Tragic, yes, for the people involved but statistically insignificant in the economy as a whole. *Additional comment to the civil engineer: the reason the roads deteriorate is we award contracts to low bidders, instead of making the contractors warranty their work. Concrete can be formulated to be virtually indestructible, but politicians are well compensated for awarding contracts.

  6. BobBigWheels says:

    So we need a Central Trucking Agency to keep these zombie transportation companies afloat. Oh… only Banks are too big to fail. Selective Capitalism.

    • MC01 says:

      You forgot airlines, defense contractors, pharmaceutical companies, steel mills… the trick is to get good lobbyists both in the government and the media and you have literally nothing to fear.

      I suspect Celadon executives skimped on lobbyists to pad their bonuses even further and now are paying the price. I hope they also had a private jet on standby ready to take them to Brazil (extradiction from there is an extremely difficult process) because as things stand right now somebody will either go to jail or will be grabbed by the ankles and shaken for the last penny.

  7. timbers says:

    Why did this happen? Celadon only needed to discover the Fed Repo market and borrow accordingly each and every day. I’m surprised those investment funds in the UK I’ve read about here, haven’t started doing that, too.

    Socialized costs, privatized profits. It’s the American way.


    • Nat says:

      The problem is the Repo market only accepts things like treasuries and mortgage backed securities as collateral, not trucking or truckers.

      • Paulo says:


        During the ’80s recession I met a trucker who said, “The only reason I still own my logging truck is that it’s too big to fit in the bank parking lot”. He meant it.

        A guy down the road from me is going through some tough times. He hid his gravel truck, trailer, and excavator out in the bush, somewhere. Just in case.

        • MC01 says:

          Now the revenue man wanted grandaddy bad
          He headed up the holler with everything he had
          Before my time but I’ve been told
          He never came back from Copperhead Road

  8. Just Some Random Guy says:

    This sucks for drivers. But to extrapolate a recession from the BK of a poorly managed company is quite a stretch. Even for posters here.

  9. Wisdom Seeker says:

    Celadon had to be really up to it’s eyeballs in horsefeathers to go BK in the middle of the holiday shipping season. I mean that kind of timing takes real effort!

    There might be a larger washout in January/February during the retail shipping lull. Sadly, I fear a few of the least-lucky at Celadon will get out of their current frying pan, take new jobs at another trucker, and then get tossed in the fire in the next wave of washouts!

    • MC01 says:

      Celadon was just waiting for somebody to put it out of its misery: the ¢47 stock at a time of extreme stock valuations says it all.
      This was a company even vulture funds didn’t really want to touch due to their “problems” with the Department of Justice: now that the bankruptcy has started the DoJ will simply walk to the front of the line and take its dib before senior creditors, and there’s absolutely nothing they can do about it.

      The real problem here is there are dozens of transport companies every bit as mismanaged as Celadon whose owners are devotedly praying every night these bankruptcies will send trucking rates upwards, and quickly, so they can put the problems into the future or sell the whole sorry lot to some fund with more money than common sense.

  10. former says:

    >> And last week, its former chief operating officer and chief financial officer were indicted on allegations of fraud. <<

    Ah good, so there still are cases, where company is not a 'person'?!?

  11. Iamafan says:

    Who are Celadon’s largest customers. Who are they hauling for? During my time at FedEx in the South and in Cal, I never saw them. Maybe I’m too old.

    • Wolf Richter says:

      They got started in the mid-1980s, with a focus on the middle of the US (I-35 corridor, etc.), and connecting into Mexico and Canada. One of their first big customers was hauling auto parts for a US automaker with an assembly plant in Mexico.

  12. ooe says:

    this is a sign of recession. As the famed investor said, “when the tide goes out, you find out who is naked.” Also, the celadon trucks in the market will put pressure to the truck manufacturing companies. this will canalize some of the market for new trucks.
    also, the newly unemployed will be on the dole rather than pay taxes and will consume less.

  13. gardener1 says:

    One step closer to doom for the Central States Pension Plan. When it finally blows up, it’s going to be a doozy.

    Damn well better keep that stock market high rolling.

    • The Rage says:

      Probably not. Pension plans generally get cut or future costs come down as the economy deflates. People do not get this.

      • gardener1 says:

        “Pension plans generally get cut”

        Yeah, that’s kind of the heart of the problem for Central States, isn’t it…

    • OSP says:

      I didn’t realize Celadon was a Teamsters operation.

  14. Pieter says:

    On the full truckload side…. tons of capacity in the market. Getting lots of calls every day for backhaul lanes for every trucking company out there. We are in a lull of cheap freight rates on the van side. ebbs and flows.

  15. unit472 says:

    With Chinese exports to the US down almost 25% doesn’t look like there is going to be much of a market for Celadon’s fleet. Instead of buying a big pickup truck maybe some enterprising body shop will put a truck bed on a Freightliner or convert them into RVs.

    • The Rage says:

      Actually those exports are not down 25%. But only 5%. Yawn.

      • Wisdom Seeker says:

        Could be even less if you figure that some folks will be dodging tariffs by trans-shipping through Hong Kong, S. Korea, and other friendly ports where someone is willing to relabel the goods.

    • Cas127 says:


      “truck bed on a Freightliner”

      You mean like a Ford 1500(000)?

  16. cesqy says:

    It’s simple, QE is destroying the economy and trucking. The only thing George Gammon didn’t cover (in the link below) is the fact that international corporations are now economically bigger and more politically powerful than most nations.

  17. jZ says:

    I am surprised…. With FED keep doing repo XX billions rolling debts every day, nobody take FED money and bail this trucker out and let them last another year so that we can have full employment and transportation cost/price stability? Powell should be fired.

  18. Sinbad says:

    Helluva time to lose your job.

  19. Kirk says:

    The Celadon Failure has more to it then just a freight slow down. It ties into the easy money, shadow banking.

    There leasing company Quality company and 19th capital had probably the biggest part of the over stating the value of asset’s to lead to there failure. They would lease them out to small to midsize carriers. Look at Freigtwaves Henderson trucking bankruptcy they list 19th capital as one of the reasons for filing Bankruptcy.

    They went to most major carriers, bought their used trucks(trade in) as the freight market was heating up with hopes of leasing them to Owner Ops or small fleets, seeing $$$.

    Quality, 19 capital had a lot of trucks that set idle for a long period of time, slowly they had been dumping them on auction. Most of the trucks that I have looked at were blow par at the auction I attended.

    So is this Easy Money? Zero Interest rate? Tax Break? Shadow Banking? Money Printing?

  20. Cashboy says:

    Looks as if no creditors will be paid other than the Inland Revenue as they are top of the list after those with fixed and floating charges on the assets.

    There seem to be a lot of “accounting errors” over the last five years.

    As an accountant, whenever I do audits or due diligence; I just audit the balance sheet (make sure all the fixed assets exist, current assets and liabilities are correct), the balancing figure is then the Profit or Loss.
    It really is that simple.

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