The co-founder of Kal Freight said he does not expect any layoffs as the trucking company restructures under Chapter 11.
Kal Freight on Thursday filed for Chapter 11 bankruptcy in the Southern District of Texas. Filing of Chapter 11 will allow the company to reorganize while continuing operations.
Co-founder MP Singh told FreightWaves no jobs should be impacted by the restructuring and that operations will continue as normal for the Texas-based company. According to a filing with the Federal Motor Carrier Safety Administration, Kal Freight employs 600 drivers and has 580 power units.
Singh said the company had overexpanded after experiencing a surge in demand in 2020 because of the coronavirus pandemic.
“I think we did so much of overexpansion, and we lost money in the new ventures of ours and tires and everything, but Kal Freight was always making the money,” he said in an interview. “We were doing good, but all the money was being used from Kal Freight.”
Kal Freight will be pulling back from other ventures, including KVL Tires, its tire company, he said. Other businesses included aircraft parts distribution, truck parts distribution and trailer leasing. The company will wholesale its parts and tires and will also sell some properties, including personal real estate.
Of the 600 drivers, “no one is worried,” Singh said. “We told employees way before doing it.”
The company retains 94% of its drivers year over year, he said.
Singh said creditors will be paid without disruption. The bankruptcy filing shows that the company has 50 to 99 creditors. The creditors with the largest unsecured claims include companies offering professional services, inventory and litigation.
Unsecured claims total at least $24 million, according to court filings. Among the largest unsecured creditors are CIMC Reefer Trailer Inc., owed more than $12 million; Continental Tire, owed more than $1 million; and Cargo Solution Express, owed more than $950,000.
The company was founded in 2014 and has locations in California, Texas, New Jersey, Indiana, Tennessee, Georgia, Arizona and Arkansas.