Financial distress in the trucking and logistics industry since the Covid-19 pandemic has brought on the Great Freight Recession, which resulted in shipping companies launching either out-of-court restructurings or bankruptcy filings.
A combination of economic issues, such as negative effects caused by the Covid pandemic, rising costs, low freight rates, a bad economy, and a glut of trucks and drivers, were cited as the reasons for most of the financial problems.
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Major trucking company KAL Freight on Dec. 5 filed for Chapter 11 protection to wind down failing affiliates and restructure its primary business after finding itself overleveraged and unable to meet its financial obligations.
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The company was one of many that couldn’t generate sufficient business as the commercial transportation industry entered a pronounced downturn after the Covid pandemic, facing a glut of trucks and drivers in the U.S.
Some trucking companies, however, were forced to file bankruptcy as part of an effort to resolve legal issues.
Defunct Illinois shipping company Mighty Move Transportation, which operated with 70 power units and 75 drivers, on Oct. 24 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Northern District of Illinois, facing two breach of contract lawsuits.
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Default forces Miranda Logistics to file for bankruptcy
Another struggling trucking company Miranda Logistics Enterprise and an affiliate also faced legal issues as they filed for Chapter 11 protection to reorganize after defaulting on a factoring agreement with their bank.
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The Los Angeles-based shipping company and its affiliate Grit & Gravel Inc. filed their petitions in the U.S. Bankruptcy Court for the Central District of California to halt collection actions against the companies that crippled their ability to collect payments from their customers.
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All legal actions against the debtors are subject to an automatic stay while the bankruptcy cases proceed.
Collection action forces trucking company bankruptcy
Miranda Logistics’ factoring company Mission Valley Bank contacted the debtors’ customers and demanded they remit their payments to the bank instead of the debtors, which forced the trucking firms to file for bankruptcy on Dec. 17, 2024, when they were unable to make payroll for their employees, according to court papers, FreightWaves reported.
The debtors, which provide trucks for earthwork, excavation, and demolition services, each listed up to $50,000 in assets and $1 million to 10 million in liabilities, with a combined total of $6 million owed to Mission Valley Bank, court papers said.
The bank secured liens against Miranda’s receivables and equipment totaling over $10 million. The debtor had an estimated $18.5 million in gross revenue in 2024 with a net income of $1.2 million.Â
The companies, founded in 1992, signed a factoring agreement with Mission Valley Bank in March 2023. The debtors’ start-up costs and expenses incurred to support their rapid growth caused capital shortfalls that led to the factoring default.
Miranda affiliate Grit & Gravel filed a motion to dismiss its Chapter 11 case as Mission Valley Bank’s collection action froze its receivables business, preventing it from operating. The company ceased operations and terminated all employees on Dec. 28, 2024.
A hearing is scheduled for Jan. 28 to consider the motion.
Miranda Logistics operates 40 power units with 25 drivers. The debtor’s owners Marco and Stephanie Miranda also own a payroll company in Los Angeles, Staffers Unlimited, that did not file for bankruptcy.
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