Comcar Industries declared bankruptcy on May 17 and plans to sell all assets as part of the legal process. This includes its five operating subsidiaries CTTS, CTL, CT, and MCT.
This comes as the first big bankruptcy in the trucking industry of 2020, following Celadon Trucking. Celadon filed for bankruptcy back in December 2019 following a charge for an accounting fraud scheme of two of the company’s formal officials.
Comcar might have shut its doors forever, but unlike Celadon, who left over 3,000 drivers stuck in mid-transit, the company’s truck will keep rolling. This comes from the decision of Comcar to sell the subsidiary companies rather than liquidating and auctioning its assets – which will allow truckers to keep their jobs.
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Why Did Comcar File for Bankruptcy?
The COVID 19 pandemic was just the final nail in a series of events that led to Comcar’s bankruptcy.
Comcar’s profit has been on the decline for more than a decade, and the giant never truly recovered from the 2008-09 recession. The numbers speak volumes, as Comcar’s revenue was $535 million in 2008 (before the recession), as compared to the $373 in 2010, one year after the recession.
2019 was when Comcar saw the biggest drop, as it lost $25 million, which did not change going into 2020, as they account for a $6 million loss up until March 2020.
Comcar’s Official Message Regarding the Bankruptcy
The official message on Comcar’s website is as follows:
“Our decision to file Chapter 11 was to better enable us to find homes for our customers, people, and assets. Before this decision, we worked diligently to find a solution that would reduce our debt, enhance our liquidity and best position all Comcar holdings for the future. After evaluating options to address our capital structure and conducting extensive negotiations, we determined that a sale of all companies would be the best path forward to maximize their value,”…“We are proud that we have found excellent future owners as each division is being purchased and will be managed by strong and reputable operators upon their respective sales. Further, this process will allow our companies to continue operating in the ordinary course of business while the sales process for each one continues. We believe this will best maintain opportunities for our people, continue to serve our customers and maintain vendor relationships.”
Comcar’s Subsidiaries Are Already Near Sale
All five business subsidiaries of Comcar are in the final steps of sale:
- CTTS Repair, Comcar’s truck repair and parts distribution firm, is being sold to an undisclosed buyer
- CTL Transportation, employing 204 truck drivers, is being sold to Service Transport
- CT Transportation, employing 390 truck drivers, is being sold to PS Logistics
- MCT Transportation, employing 225 truck drivers, is being sold to White Willing Holdings
Comcar filed for bankruptcy under Section 363 of the Federal Bankruptcy Code. This means that the companies who agreed to purchase Comcar’s subsidiaries may still be outbid by a third party as the process moves forward.
The Trucks Are to Keep Operating, According to Comcast
Comcar’s official statement says that the trucks are to keep operating during the proceedings. The goal of selling the subsidiaries instead of liquidating all assets, was to keep the people employed, customers served, and vendor relationships maintained.
Was The Death of Randy Clark, Comcar’s New CEO the Reason?
Randy Clark, President & CEO of Comcar, unexpectedly passed away on April 5, 2020. Speculations that his untimely death might have something to do with Comcar’s bankruptcy have since then been debunked, following statements from Comcar officials.
Clark was appointed president and CEO of Comcar in November 2019, succeeding Michael P. Ryan, who was at the position since April 2017.
The Harbinger of More Bankruptcies?
As the pandemic lockdown is slowly being lifted, many businesses will have the task to pick up the pieces. Many businesses are reporting huge losses, and the smaller ones will have big trouble staying afloat. Comcar was a part of the top 1 percent of trucking companies by fleet size. The rest 99 percent are companies that have 500 or fewer trucks.
The trucking industry has been in recession for two years now due to the oversaturation of trucking companies and the shortage of experienced drivers. In 2019, a total of 640 companies shut their doors and filed for bankruptcy. To compare that number with 2018, it is almost triple – only 175 trucking companies went bankrupt in 2018.
Will Comcar be the first of many trucking companies to go bankrupt in 2020? That remains to be seen.