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Celadon Group Files Chapter 11, Shuts Down Operations

December 09, 2019, 09:47 AM
Filed Under: Bankruptcy
Related: CEladon Group

Celadon Group, Inc. announced that it, along with its 25 affiliate entities, have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Celadon also announced it will shut down all of its business operations effective Dec. 9. At the date of its shutdown, Celadon was operating a fleet of approximately 3,300 tractors and 10,000 trailers with nearly 4,000 employees.

Celadon intends to use its Chapter 11 proceedings to wind down its global operations. The shutdown does not include the Taylor Express business headquartered in Hope Mills, NC, which will continue to operate while the company explores a going concern sale of its 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,” said Paul Svindland, Chief Executive Officer of Celadon.

Svindland noted, "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. Therefore, in conjunction with our lenders, we concluded that Celadon had no choice but to cease all operations and proceed with the orderly and safe wind down of our operations through the Chapter 11 process."

Last week, the Justice Department and Securities and Exchange Commission announced charges against the company’s former Chief Operating Officer and Chief Financial officer for their alleged role in a complex securities and accounting fraud scheme that resulted in a loss of more than $60 million in shareholder value. In April, Celadon itself entered a Deferred Prosecution Agreement with the government, under which it is obligated to pay restitution of $42.2 million.

To support the wind down of operations, Celadon's lenders have agreed to provide incremental debtor-in-possession financing.

Svindland further stated, "I would like to thank our vendors, customers, and lenders, and most importantly, I would like to thank our dedicated administrative employees and drivers whose efforts should not be seen as a reflection of this Chapter 11 filing. They have sacrificed so much of their time and effort for Celadon, and for that, the Company is eternally grateful."

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