Carrier Blames Weak Freight Market, Bad Lease Deal For Latest Bankruptcy Woes

Family-owned Hendrickson Truck Lines Inc. of Sacramento, California, recently filed for bankruptcy protection, citing a soft freight market, loss of two key customers and a bad truck leasing agreement.

In its filing with the U.S. District Court for the Eastern District of California, it listed assets and liabilities as being between $10 million and $50 million.

Robert Destfino, vice president of sales of Hendrickson, declined to comment about the company's recent bankruptcy filing when contacted by FreightWaves.

The carrier, which operates in 10 western states, lists up to 49 creditors.

The carrier has about 90 trucks and 97 drivers, according to the Federal Motor Carrier Safety Administration SAFER website.

The company said its financial problems started in January with a sharp decline in overall freight tonnage. This, combined with excess truck capacity, resulted in a 21% rate drop compared with 2018, resulting in a $400,000 per month revenue drop, according to its petition.  

Two of the carrier's top customers, which accounted for nearly 50% of its business, switched to lower-cost providers, the company said.

Despite the economic downturn, Hendrickson said it needed to replace its aging fleet and entered a lease agreement to replace 89 trucks for around $133,000 per month with 19th Capital Group LLC of Indianapolis.

The petition states that shortly after entering the leasing deal, the carrier started experiencing unanticipated maintenance issues with 25 of the trucks.

"Many of the trucks were not road worthy and broke down right after they were put in service," Hendrickson said in its petition.

Truck repairs, towing costs and lost revenue and downtime cost the company nearly $864,000, the carrier said, resulting in a severe cash flow problem that caused Hendrickson to fall behind on its monthly truck lease payment with 19th Capital Group.

The trucking company alleges it tried to work with the leasing company about the defective trucks, but that 19th Capital Group refuses to do so until Hendrickson makes good on its delinquent lease payment.

Hendrickson said it simply does not have the liquidity to make the payments, which could lead to the repossession of all 89 trucks, resulting in a "complete shutdown" of its business and possible liquidation of the company.

The carrier previously filed for Chapter 11 protection in June 2015 after the California Labor Commissioner's office found that 17 of its truckers were misclassified as independent contractors when they were actually employee drivers. The drivers were awarded nearly $2 million.

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