Market Overview

The Mysterious Resurrection Of Celadon's Mexican Business

Share:
The Mysterious Resurrection Of Celadon's Mexican Business

Bankrupt Celadon Group says employees in Mexico recently resumed "limited operations" of its transportation business there using the company's cash receivables after initiating a series of labor disputes, court filings show.

Celadon made puzzling disclosures in two Feb. 21 filings in U.S. Bankruptcy Court connected to its efforts to sell Mexican subsidiaries, including Jaguar Transportation, and selected assets to PAM Transportation Services for $7 million.

"Recently, the Mexican Debtors' employees recommenced limited operations of the Mexican Business using cash proceeds of accounts receivable generated and collected by the Mexican Debtors," the company said in a filing.

The court filings provide few details about the resumption of the Mexican business, including whether Celadon agreed to it. The company notes that it occurred after unspecified employees "initiated several labor disputes under Mexican law."

Lawyers for Celadon Group did not respond to FreightWaves' questions, including whether the company instructed employees to resume operations and the extent of its control over operations in Mexico.

The filings do suggest, however, that labor disputes and the state of the Mexican business created barriers to finding buyers as Celadon liquidates the assets of its once-sprawling North American transportation empire under Chapter 11 bankruptcy proceedings in the U.S.

The company also noted that the Mexican employees "were unavailable to assist the Debtors in their marketing efforts of the Mexican Business."

Celadon said circumstances pushed it to pursue a deal with PAM Transport. The $7 million deal, subject to ongoing negotiations and court approval, falls short of the stated value of Celadon's Mexican assets.

Celadon valued Jaguar alone at $23.4 million in a February court filing but said $18.5 million of that was from tax refunds owed in Mexico. The proposed deal with PAM envisages those refunds going back to Celadon's creditors.

Celadon faced resistance from Jaguar management after moving to shut down the carrier after filing for bankruptcy protection in the U.S. on Dec. 9. The carrier's management told FreightWaves at the time that business would continue as usual. Drivers subsequently blockaded Jaguar's Nuevo Laredo terminal in protest of unpaid wages.

By Celadon's account, it did manage to shut down Jaguar. But it remains unclear how long that lasted or when Jaguar returned to service.

Reynaldo Gómez, who identified himself as Jaguar's new CEO and president, told the Mexican transportation media outlet T21 in a Feb. 10 interview that the carrier had 70 trucks in operation and was seeking a new strategic partner. 

Gómez, who could not be immediately reached for comment, told T21 that Celadon represented about 60% of Jaguar's operations. The interview did not shed light on Jaguar's corporate relationship to Celadon, which owns 75% of the carrier, according to U.S. court filings.

FreightWaves Cross-Border Freight Market Reporter Noi Mahoney contributed to this report.

Image Sourced from Pixabay

 

Related Articles

View Comments and Join the Discussion!

Posted-In: acquisition CeladonM&A News Commodities Global Markets General