The economic downturn in the trucking industry led to dozens of bankruptcy filings in 2025, as the Great Freight Recession victimized the sector since the end of the Covid-19 pandemic.
The downturn has claimed another trucking company this month, as Sparhawk Trucking battles financial distress to stay afloat.
High hopes for a recovery in the trucking industry came in December 2025 as only three companies filed for bankruptcy petitions, the lowest number since Equipment Finance News began tracking the data.
Highest number of filings
But those hopes were dashed when 20 firms filed for bankruptcy in January 2026, the highest number of bankruptcies since Equipment Finance News began tracking the data.
Trucking companies have battled reduced shipping demand, lower freight rates, and rising costs of labor, fuel, and insurance driven by inflation over the last four years, which is known as the Great Freight Recession.
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Sparhawk Trucking files for bankruptcy
And now, 47-year-old Wisconsin trucking company Sparhawk Trucking LLC has filed for Chapter 11 protection after being placed into receivership and settling a massive lawsuit liability, Trucking Dive reported.
The Wisconsin Rapids, Wis., trucking and logistics company and three affiliates filed their petition in the U.S. Bankruptcy Court for the Western District of Wisconsin on March 13 to halt assignment for the benefit of creditors and receivership actions against the company.
The Chapter 11 filing invokes an automatic stay on all legal actions against the debtor, which will allow the debtor to seek access to its cash collateral under the bankruptcy case to pay its employees, vendors, and other expenses to continue operating as it reorganizes, as allowed in the bankruptcy statute.
Sparhawk listed up to $50,000 in assets and $10 million to $50 million in liabilities in its petition.
Revenue grew in 2022
The debtor, whose total revenue grew to $49.6 million in 2022 before falling to $35 million in 2025, operated 200 trucks with 1,000 trailers by 2023, according to a bankruptcy declaration by owner Mark A. Sparhawk, listed on PacerMonitor.
For the company’s most recent payroll paid on March 12-13, the company listed 54 drivers on W-2 payroll and 48 owner-operators. The company also employs 22 office employees and 18 shop workers.
The debtor’s major financial burdens consist of over $10.1 million in debt owed to WoodTrust Bank, which financed Sparhawk’s purchase of 23 Peterbilt trucks in 2021 or 2022, and $697,000 owed to its financial consultant, Silverman Group, according to the declaration.
Sparhawk claims to have done business with WoodTrust since 1979, court papers said.
The debtor had also faced a $136 million claim related to a lawsuit filed against Sparhawk, dating back to an August 2021 incident when one of Sparhawk’s trucks, driven by an employee, hit a train hauling hazardous products in Louisiana.
Sparhawk settles lawsuit
Sparhawk’s insurance company only covered up to $10 million in insurance payments, but the trucking company in September 2025 negotiated a settlement with the plaintiffs to accept the $10 million as full satisfaction of all claims against the debtor, the declaration said.
The debtor alleged in its declaration that the bank’s loan officer and two employees of the financial consulting group Silverman Group convinced Sparhawk to agree toan assignment for the benefit of creditors and the appointment of a receiver as part of a forbearance agreement in November 2025.
Sparhawk said he did not understand the assignment for the benefit of creditors process, but also did not seek the advice of a lawyer.
“I trusted what they told me,” the owner Sparhawk said in the declaration.
More bankruptcies:
- Troubled automobile maker files Chapter 7 bankruptcy liquidation
- Major gambling destination files for Chapter 11 bankruptcy
- Major department store brand liquidates in Chapter 11 bankruptcy
Beginning in May 2025, the bank offered forbearance agreements to Sparhawk, which resulted in the debtor’s bank accounts being swept by the bank three times before payroll disbursements from May 2025 through December 2025, leaving insufficient funds to cover payroll, the declaration said.
“The bank required me to sign the assignment and waive my right to contest the receivership, or the bank would not let payroll clear,” Sparhawk said in the declaration.
Debtor finally seeks lawyer advice
A receiver was appointed on Dec. 9, 2025, and Sparhawk claimed that by mid-February, he was advised by an undisclosed person to seek a lawyer’s representation.
Sparhawk hired law firm Kerkman & Dunn, according to the declaration, around the time Silverman Group allegedly informed the owner that unless he came up with a $400,000 by March 13, the bank would likely start to shut down the business.
A shutdown would not happen, as the debtor filed for Chapter 11 on that day, invoking an automatic stay against any legal actions from the bank, Silverman, and receiver while the bankruptcy case proceeds.
Long-haul truckload demand plummeted by 25% in the first half of 2025, with trucking becoming more of a short-haul delivery method for the final leg of freight movement, according to the Long Outbound Tender Volume Index, FreightWaves reported.
Related: Major mattress chain converts to Chapter 7 bankruptcy liquidation
