Fraud
On May 1, 2017 the company announced that COO Eric Meek had resigned after auditor BKD, LLP had determined that the financial statements for the 2016 fiscal year “should not be relied upon.” On May 8, the New York Stock Exchange informed the company that it had failed to meet the exchange's listing standard and the company's stock could be delisted in six months. The noncompliant financials put Celadon into default with its lenders. The company reached a new credit deal with Bank of America on July 3 after agreeing to a host of operating and reporting restrictions. CEO Paul Will announced his retirement on July 13.
The NYSE suspended trading of Celadon's stock in April, 2018 and moved to remove its listing following an internal investigation which would require Celadon to restate financial results back to 2014.[6] Subsequently, it was found that the errors were the result of a series of trades of aging and unused trucks using invoices with deliberately inflated values to intentionally hide significant losses from its investors.
In April 2019, Celadon sold its logistics division, Celadon Logistics, to TA Services, a Mansfield, Texas-based division of PS Logistics. Celadon Logistics would run independently for the first 6 months then be folded into TA Logistics.[7][8]
On April 25, 2019, it was announced that Celadon Group Inc. had agreed to pay total restitution of $42.2 million as a part of its deferred prosecution agreement (DPA) for filing materially false and misleading statements to investors and falsifying books, records and accounts.[9]
On May 9, 2019, the Securities and Exchange Commission (SEC) charged Danny Williams, the former President of former Celadon subsidiary Quality Companies, with accounting fraud which had allowed Celadon to hide "substantial losses" and its true financial state.[10]
On December 5, 2019, the SEC charged former Celadon president and COO William Eric Meek and former CFO Bobby Peavler with accounting fraud. In parallel, the U.S. Attorney's Office for the Southern District of Indiana and the U.S. Department of Justice, Fraud Section announced Williams had pled guilty to related criminal charges.[11]
Bankruptcy
On December 8, 2019, Celadon Group, Inc. and 25 of its affiliated companies filed for bankruptcy in the United States District Court for the District of Delaware. As of October 2019, the Federal Motor Carrier Safety Administration reported that Celadon operated 2,771 trucks and employed 2,553 drivers, ranking it as the 38th largest carrier in North America.[12] The company notified its drivers via ELD messaging that it was ceasing operations, and assured them that those who completed deliveries and followed instructions to return equipment would be compensated.[13]
The company received $165 million from the sale of 49.9% of the company to Luminus Management four months before filing. The trucking company was delisted from the New York Stock Exchange in 2017, for failure to disclose quarterly and annual reports as required by SEC, and along with a poor trucking market as well as the legal issues, that included a $42.2 million fine by the U.S. Department of Justice, made securing more funding impossible.[14]
The court, in a first stage bankruptcy plan, authorized the use of $5.4 million of an $8.2 million loan to pay employees. The closing also includes Hyndman Transport, that ends 82 years of operation, and Jaguar Transportation,[14]
