Declining demand, high interest rates, and rising inflation led to financial distress for shipping company businesses over the last two years.
The freight trucking industry recession has been so severe, that shipping companies that have been hit the hardest have taken the final step in filing for Chapter 7 liquidation, instead of Chapter 11 reorganization.
Related: Popular Asian restaurant chain files for Chapter 11 bankruptcy
Freight forwarder company Boateng Logistics closed down after the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate, and 92-year-old trucking company Arnold Transportation Services laid off all of its employees and shuttered operations five days before filing for Chapter 7 liquidation on April 30.
U.S. Logistics Solutions, a shipping company owned by private equity firm Ten Oaks Group, shut down operations, laid off its employees, and on June 21 filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas in Houston with plans to liquidate its assets.
Image source: Shutterstock
Flex Intermodal files for Chapter 7 liquidation after closure
Finally, Flex Intermodal, a California-based trucking company that shut down in August 2023, filed for Chapter 7 bankruptcy liquidation on Sept. 13 as it lost its authorization to operate and is hampered by several lawsuit judgments, FreightWaves reported.
The Fremont, Calif.-based shipping company, which at one time operated out of the Port of Oakland, Calif., listed up to $100,000 in assets and $1 million to $10 million in liabilities in its petition filed in the U.S. Bankruptcy Court for the Northern District of California. The debtor indicated that it doesn’t expect to have sufficient assets to make payments to unsecured creditors.
Related: Major shipping company shuts down; no bankruptcy filing yet
Flex Intermodal ceased operations in August 2023 after the Federal Motor Carrier Safety Administration revoked its authority to operate and its insurance company canceled its bodily injury property damage coverage. The federal regulator approved the company’s operating authority in September 2018.
The company had 25 trucks and 30 drivers when it ceased operations, according to FMCSA.
More bankruptcy stories:
Big Lots retail chain ready to file Chapter 11 bankruptcyPopular retail product maker files for Chapter 11 bankruptcyMattress Firm rival files for Chapter 11 bankruptcy
The trucking company faced four lawsuit judgments entered against it by Equify Intermodal and Flexi Van Leasing in the Superior Court of Alameda County, Calif., and by Balboa Capital and Equify Financial in the Superior Court of Orange County, Calif., according to FreightWaves.
The debtor is also the defendant in a May 9, 2024, lawsuit filed by Ally Bank in the Superior Court of Alameda County, which seeks to repossess a 2019 Freight Cascadia vehicle after Flex allegedly defaulted on a loan amount of about $82,886, a $8,061 in finance charge and about $496 in late fees.
The bank estimated the trade-in value of the vehicle to be about $44,250.
Ally Bank is seeking possession of the vehicle; damages equal to the rental value of the vehicle from the date of default; damages for depreciation and deterioration of the vehicle; the principal amount, finance charges and late fees owed on the loan; and all late, repossession and investigative fees.
Under federal bankruptcy rules, all pending litigation filed against Flex Intermodal is subject to an automatic stay while the debtor’s Chapter 7 case proceeds.
The debtor’s largest unsecured creditors include U.S. Small Business Administration, owed $2.8 million; Hemer Rousso & Heald, owed $213,000; and Balboa Capital, owed $210,000.
While the debtor has not operated in 2024, it reported gross revenue of $1.2 million in 2023 and $1.9 million in 2022.
Related: Veteran fund manager sees world of pain coming for stocks
