The trucking industry downturn over the past year has been characterized by lower demand for ocean transportation, leading to lower freight rates and inflationary conditions that have led to higher operating costs. Interest rates also rose during this period, raising the cost of companies' debt obligations.
All of these financial difficulties have forced transportation and logistics companies to undertake out-of-court restructuring or file for bankruptcy to reorganize their businesses, sell their assets as a going concern, or liquidate and close their operations.
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The logistics industry, which includes trucking, has faced serious difficulties that have led many companies to take extreme measures, such as filing for Chapter 7 bankruptcy liquidation.
Related: Another doomed trucking company files for Chapter 7 bankruptcy
Among the logistics companies that followed the liquidation trend was Sunset Logistics, which faced financial difficulties and had to file for Chapter 7 bankruptcy protection to liquidate its assets after ceasing operations.
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The Irving, Texas, logistics company and its subsidiaries filed their petition Oct. 3 in the U.S. Bankruptcy Court for the Northern District of Texas in Dallas, blaming the poor economy, low freight rates and the increasing costs.
They also faced a lawsuit filed in April 2024 in the U.S. District Court for the Northern District of Alabama by their factoring company Porter Capital of Birmingham, Alabama, alleging that Sunset Logistics and its affiliates owed it $5 million. , plus accrued costs and expenses, of a factoring agreement with recourse in default.
Another logistics company that filed for Chapter 7 bankruptcy and faced financial difficulties was freight forwarding company Boateng Logistics, which ceased operations after it filed for Chapter 7 bankruptcy on February 22 with plans liquidation.
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Star Transportation files Chapter 11 to reorganize
And now, trucking company Star Transportation PA and five subsidiaries have filed for Chapter 11 bankruptcy to reorganize their businesses after one of the company's lenders issued an order to repossess 47 of its trucks for which had provided financing.
The Miami, Florida-based company and its affiliates Finance Solutions LLC, MDL Business Group LLC, Star Transportation A, Star Truck Service Inc. and US Express Line LLC filed their petition in the U.S. Bankruptcy Court for the District South Florida listing $1 million to $10 million in assets and $10 million to $50 million in liabilities.
Related: Struggling hospital chain files for Chapter 11 bankruptcy
The debtor said in court documents that it was facing financial difficulties that the transportation industry has struggled with for several years, including rising costs, increased insurance claims and the high cost of maintaining and repairing trucks and trailers. Some repair costs tripled from a few years ago, company president Victor Khramov said, according to FreightWaves.
Star Transportation faced litigation before filing for bankruptcy
The bankruptcy filing followed a lawsuit filed about a week earlier by two former workers who alleged in federal court that the trucking company had misclassified workers as independent contractors rather than employees, in violation of the Labor Standards Act. Fair.
All litigation is subject to an automatic stay while the bankruptcy case proceeds.
Star Transportation operates a fleet of 219 trucks and trailers, including owned and leased equipment.
The debtor obtained provisional approval for a debtor-in-possession factoring agreement with RTS Financial Services to finance its continued operations.
Star Transportation needed the factoring agreement because it did not have enough unencumbered cash or other assets to continue operating during the Chapter 11 case or to proceed with a reorganization without provisional approval of the DIP factoring facility, according to court documents.
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