Several trucking companies and freight brokerages are owed thousands of dollars after a Kentucky-based lumber processor filed for Chapter 11 bankruptcy protection Monday.
Northland Corp., headquartered in La Grange, Kentucky, filed its petition in the U.S. Bankruptcy Court for the Western District of Kentucky.
In its filing, Northland lists both its assets and liabilities as between $1 million and $10 million and states it has up to 199 creditors.
Among the lumber company’s top 20 unsecured creditors — which are last in line for payment in Chapter 11 cases — are three trucking companies: LIV Enterprises Inc. of Louisville, Kentucky, owed $55,7000; Melton Truck Lines Inc. of Oklahoma City, owed more than $49,100; and Sparhawk Trucking Inc. of Wisconsin Rapids, Wisconsin, owed around $49,800.
Several other well-known flatbed trucking companies are listed as unsecured creditors in Northland’s bankruptcy filing, along with two of the nation’s top freight brokerages: C.H. Robinson Worldwide of Minneapolis and Total Quality Logistics, headquartered in Cincinnati.
Orn E. Gudmundsson Jr., chief executive of Northland Corp., did not return FreightWaves’ telephone call seeking comment.
The initial status hearing in the bankruptcy case is scheduled for August 25.
The lumber industry has been scrambling to recover financially since China placed retaliatory tariffs of up to 25% on lumber imports nearly a year ago. Hardwood lumber exports dropped by almost 40% in 2019 because of the trade war, and several lumber companies, including Northland, were forced to lay off employees or close plants, according to a Wall Street Journal report.
However, China issued two tariff exclusion lists for certain U.S. products, including seven hardwood products, in late February, according to the U.S. Department of Agriculture.
Breach-of-contract lawsuit spurred Chapter 11 filing
Northland Corp., which specializes in drying, sorting, grading and marketing hardwood lumber, filed for bankruptcy protection Monday. This news comes just three months after one of its customers, C & K Lumber & Exports (C&K), headquartered in White Bluff, Tennessee, filed a breach-of-contract lawsuit against both the company and Gudmundsson.
In the suit filed in U.S. District Court in Louisville, Kenneth Walker, owner of C&K, claims Gudmundsson’s company owes him more than $290,750.
According to court documents, C&K has been selling green lumber to Northland for more than 15 years. The terms negotiated with Northland stated that C&K would give the lumber corporation a 2% discount if it paid its invoices within 10 days.
However, starting in 2017, Northland started deducting the 2% discount on its invoices, despite paying after the 10-day term, according to court filings.
In court documents, Northland denies it regularly deducted 2% from C&K invoices.
Beginning in mid- to late 2019, Northland began ordering “substantial lumber shipments from C&K, with the oral promise from Gudmundsson” that it would begin paying back invoices owed to C&K. According to the agreement, Northland would also pay for the newly ordered loads of lumber within 45 days without deducting a 2% discount, court documents allege.
Court filings claim that Northland and Gudmundsson failed to pay many of the agreed-upon invoices despite repeated demands from C&K.
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Hans Witt
I don’t feel sorry for these carriers who cut rate, extend credit just to dominate the back haul market. Lumber shippers have have been playing this game for ever, and carrier just play long, when are people going wake up.
Middle men and broker treat all fright the same. Today’s trucking company are dominated by people who have middleman mentality, they try and run asset based company like a brokerage. Doesn’t work.
Seriously!
First, they shouldn’t have relied so heavily on exports to China. Second, they should have put more stock in this country instead of selling goods to those Communist. I don’t gimme any of your crop about world economy. This country has been getting screwed on trade by everyone and its about time something was done about it. 3rd, why in the hell would you let your company get that deep into a customer. 10K over 45 days and I’d have been outta there! I feel for the employees and carriers who will most likely lose out. Didn’t ANYBODY SEE THE WRITING ON THE WALL? As for CH and TQL…….GOOD! I’m glad they finally got some of what they continuously dish out on carriers every day! Karma is a bitch!
CA Trucker
Looks like Trump administration trade/tariff wars didn’t help them either.
Rod
3 rd generation ownership. The kid thought the Far East was the land of milk and honey With some bad internal advice ( the export division) they neglected their domestic markets ever increasingly to the point of being obsolete. When the export market crashed there was no where else to move the product because the domestic customers had moved on and found a more reliable supply base. This I know because I wkrked for them for the last 20 yrs in sales and purchasing
Mr dissapointed
Tony leanhart
Rod I know what ya mean . I was there for39 years and knew when the blessed one came into the company it was dumped. How do you get over 3 million in state and government grants just 3-5 years ago to lying to your suppliers, trucking depts. and employees and losing it all. He made promises had me
make promises to suppliers knowing he couldn’t keep them.The little man had zero experience in the industry and had no friends in it either. A spoiled 3rd generation owner that’s making his family turn over in their graves. I bet uncle Jon is laughing ever day.
Another LONG term employee promised by his grandfather, dad and by him I would be taken care of . I was left with no severance , no thank you not even a hand shake by this snake.
Another employee taken down the river.
ben
cheap freight and then you still get screwed,imagine that!!!!!