Celadon files Chapter 11 bankruptcy, shuts down business operations

By Caroline Salls

Pittsburgh, Dec. 9 – Celadon Group, Inc. and 25 affiliates filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware.

According to a company news release, Celadon planned to shut down all of its business operations, effective Dec. 9, except for the Taylor Express business based in Hope Mills, N.C.

The company said Taylor Express will continue to operate in the ordinary course while Celadon explores a going concern sale of its operations.

Celadon said it intends to use its Chapter 11 proceedings to wind down its global operations.

“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,” chief executive officer Paul Svindland said in the release.

“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.”

In conjunction with the bankruptcy filing, the company obtained a commitment for $8.25 million in debtor-in-possession financing to support the going-concern operations of Taylor Express.

Blue Torch Finance LLC is the DIP facility agent.

The DIP loan will bear interest at the Base rate plus 1,250 basis points.

The facility will mature on the earliest of March 31, subject to a one-month extension, 25 days following the date of entry of the interim order if a final order has not been entered, completion of a sale of all or substantially all of the loan parties’ assets, the effective date of a plan of reorganization and the date the loans are accelerated.

According to court documents, Celadon had roughly $427 million in total assets and $391 million in total debt as of Dec. 2.

The company’s largest unsecured creditors are the Department of Justice, based in Washington, D.C., with a $33 million litigation claim; TA Dispatch, LLC of Ensley, Ala., with a $4.68 million trade claim; Comdata Corp. of Brentwood, Tenn., with a $2.8 million trade claim; Pilot Travel Centers, LLC, based in Knoxville, Tenn., with a $2.5 million trade claim; Transportation Enterprise Leasing on Chattanooga, Tenn., with a $2.04 million lessor claim; Sheryl Ray, represented by Simon Law Firm of St. Louis, with a $1.49 million litigation claim; Grant Thornton LLP of Oakbrook Terrace, Ill., with a $1.36 million professional claim; ZA-00002369, with a $1.28 million litigation claim; Goodyear Tire & Rubber Co. of Akron, Ohio, with a $1.26 million trade claim; and Comercializdora y Distribuidora Martinez y MTZ of Nueva Leon, Mexico, with a $1.2 million trade claim.

DLA Piper LLP (US) is representing Celadon in its Chapter 11 proceedings.

Celadon provides long haul, regional, local, dedicated, intermodal, temperature-protect and expedited freight service and is based in Indianapolis. The Chapter 11 case number is 19-12606.

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