A major player in Florida's commercial trucking industry quickly filed for bankruptcy last week as an attempt to keep the business moving and produce not rotting in trucks.
Florida-based Cargo Transportation Services filed for Chapter 11 bankruptcy on Wednesday after money started to be seized out of the company's bank by a lender. The lender claims CTS defaulted on $7.9 million in loans. However, that money was "nonmonetary" according to the lending bank.
According to sources, officials for CTS were concerned about the fruits and vegetables that have already been loaded in many of the company's trucks. As of last week many of the company's trucks were already filled with produce, yet the drivers could not access money to pay for the gas to make the deliveries.
According to documents filed in U.S. Bankruptcy Court, CTS has already asked the judge to let the company access some of the funds for now while the bankruptcy case gets worked out.
In addition to the bank seizing money from CTS accounts, money was also seized from accounts receivable, which is the money that customers have already paid.
At this time it is unknown what caused the trucking company that makes $100 million in annual revenues to supposedly default on loans.
While the exact details of what CTS plans on doing have not been released, a Chapter 11 bankruptcy filing calls for reorganization and a restructuring of debts. Typically a business will draft up a new payment plan to pay off debts. This plan is then voted on by creditors and can either be accepted or rejected. If rejected, a judge could make creditors still accept it, or the business can work on drafting a new plan to represent to creditors.
Source: The Tampa Tribune, "Major Florida trucking company files for bankruptcy," Michael Sasso, 13 Jan 2011