A 92-year-old trucking company, Arnold Transportation Services of Grand Prairie, Texas, ceased operations recently and filed for Chapter 7 bankruptcy liquidation.
Three affiliated companies — Parker Global Enterprises, Parker Transport Co. and DVP Holding Corp. — also filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the District of Delaware.
In February 2022, Arnold Transportation was acquired by Pride Group Logistics, an affiliate of Pride Group Holdings of Mississauga, Ontario, one of Canada’s largest trucking and leasing companies. Pride Group and its affiliates, including the four companies listed above, filed for creditor protection on March 28 in Canada, citing a capacity glut and low rates.
Pride Group stated in court filings that “Arnold has not been profitable and therefore Pride Logistics has been funding Arnold operations. Some of Arnold’s dispatchers are paid through Pride Logistics payroll.”
Arnold Transportation had 341 truck drivers and 402 power units at the time of its closure, according to the Federal Motor Carrier Safety Administration’s SAFER website.
FreightWaves reported in April that Pride Group owes creditors more than $637 million, and was seeking bankruptcy protection amid a capacity glut and low rates, according to President and CEO Sulakhan “Sam” Johal. He founded the company with his brother Jasvir Johal, vice president, in 2010.
In court filings, the company stated that it was profitable until the pandemic, according to Sam Johal. Following the downturn across the trucking industry after the pandemic, the family-owned company was unable to pay its debts.
No warning
Former Arnold Transportation drivers reported being laid off without warning on April 25 and stated that their medical benefits were also canceled.
The company listed its assets as up to $10 million and its liabilities as between $10 million and $50 million, according to the petition filed Tuesday in Delaware. The petition states that it has up to 199 creditors and that funds will be available for distribution to unsecured creditors. No creditors were listed in Arnold Transportation’s bare-bones petition.
Navraj Johal is listed as the sole director of the now-defunct trucking firm, which had provided regional, dedicated and expedited services since 1932, according to its website. Navraj Johal’s relationship to the Johal brothers was not immediately clear.
According to the Texas Workforce Commission website, Arnold Transportation Services filed a Worker Adjustment and Retraining Notification (WARN) Act Wednesday that it was laying off 157 workers, nearly a week after its closure. Companies with over 100 employees are required to give a 60-day notice of a planned shutdown.
According to FMCSA’s SAFER website, the agency granted Arnold Transportation’s common and contract carrier authority in 1981. Arnold Transportation’s Bodily Injury Property Damage coverage is slated to be canceled on May 31. However, the company’s surety bond coverage remains active, according to FMCSA.
Prior to its closure, the company’s trucks had been inspected 270 times, and 60 had been placed out of service for a 22.2% out-of-service rate over the preceding 24-month period. That is slightly lower than the industry’s national average of around 22.3%, according to FMCSA.
The company’s drivers had been inspected 432 times, and 11 were placed out of service over a two-year period, resulting in a roughly 2.5% out-of-service rate. The national average for drivers is about 6.7%.
In the past two years, Arnold Transportation’s trucks had been involved in four fatal crashes, 10 injury crashes and 17 tow-aways.
According to court documents, “It is in the best interest of each company and its respective creditors, employees, stakeholders and other parties in interest, that each company files a voluntary petition under Chapter 7.”
Based on legal and financial advice, the petitions state, Navraj Johal decided to file for Chapter 7 and “to seek to dismiss or withdraw (as applicable) such company’s [companies] pending Chapter 15 cases.”
As of publication, Penelope Jensen, a bankruptcy attorney for Pride Group, had not responded to FreightWaves’ request for comment.
Pride Group was granted creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada after Mitsubishi HC Capital filed lawsuits accusing the Pride Group of defaulting on payments it had personally guaranteed. Mitsubishi HC Capital is seeking damages of $100 million in the lawsuits.
FreightWaves’ Noi Mahoney contributed to this report.
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