Since the Covid-19 pandemic began four years ago, logistics companies have been dealing with a number of challenges that have impacted their businesses, including supply chain issues and a shortage of truck drivers to go along with thousands of truck driver job openings that are going unfilled.
These challenges often impact logistic company revenue and can force the firms to file either Chapter 11 bankruptcy or Chapter 7 liquidation if the financial distress conditions become unbearable.
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Lawsuits can prompt bankruptcy filings
Sometimes unexpected circumstances, such as lawsuits, can force these companies to file bankruptcy to implement an automatic stay on all legal proceedings. This was the case with J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas, listing up to $500,000 in assets and $100 million to $500 million in liabilities.
The debtor filed for bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.
Another California-based logistics company shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities, FreightWaves reported.
The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.
The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.
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Logistics company owed millions to trucking, factoring firms
Freight forwarder company Boateng Logistics has joined a growing list of shipping companies that have permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.
The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies, FreightWaves reported. The company filed bankruptcy apparently before any creditors could take legal action.
Boateng's largest unsecured creditor is the U.S. Small Business Administration, owed on a $750,000 loan. Other unsecured creditors include factoring firms Five Star Factoring, eCapital Freight Factoring Co. and Triumph Business Capital. The bankruptcy court will hold a meeting of creditors on March 28.
Freight forwarding companies typically manage the details of moving products from one location to another, arranging where products can be loaded on a ship, plane or truck and transported to a warehouse for fulfillment and distribution.
However, a freight forwarding company does not manage trucks, drivers or port workers. What they do best is negotiate better rates directly with carriers to get better shipping prices than eCommerce companies can secure on their own, according to ShipHero. They can also can coordinate shipments on multiple types of transportation for land, sea and air, and have a deep understanding of customs, imports and exports for handling overseas shipments.
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