A coalition of trucking companies filed a petition on Monday to force an Indianapolis-based freight brokerage into Chapter 7 bankruptcy proceedings for unpaid transportation services.
The involuntary Chapter 7 bankruptcy petition, filed in U.S. Bankruptcy Court for the Southern District of Indiana, claims CMA Freight Services LLC owes 28 trucking companies nearly $40,000, according to the filing.
Tony Mangini, legal manager for Alexander, Winton & Associates, a contingency-based collection firm headquartered in Olive Branch, Mississippi, said the move was necessary after the freight brokerage failed to pay the petitioners — mostly small-business truckers — since October.
“At the end of the day, our clients rendered services for CMA [Freight] and CMA didn’t pay them,” Mangini told FreightWaves. “I think this is an avenue we have to pursue because there’s just so many of our clients involved that are owed a substantial amount of money.”
The largest unsecured creditors listed in the petition include Easy & Quick Trans. Inc., headquartered in Roselle, Illinois, which is owed $4,815; MAG Carriers LLC of Dearing, Georgia, which is owed $3,840; and Kappa Transport LLC of Dallas, owed more than $2,220.
Andy Dittmaier, general manager of CMA, told FreightWaves the claims are against the company’s shuttered brokerage, CMA Freight Services, not against the trucking side of the business, CMA Logistics, which has nine drivers and 10 power units, according to the Federal Motor Carrier Safety Administration’s SAFER website.
Dittmaier claims the brokerage side of the business turned south after he allegedly brought on a freight agent, based in Arizona, who was “fantastic at sales, but horrible at everything else.”
“He didn’t follow our operating procedures, moved hundreds of loads for customers that were not credit-approved, exceeded credit limits on customers, told carriers they didn’t need to turn in paperwork,” Dittmaier told FreightWaves.
The CMA general manager claims the new freight agent caused the company’s collection rate to drop from 99.1% to 77%, and nearly $1.2 million in “missing” revenue was discovered since the agent was terminated.
“Customers don’t pay us, we can’t pay carriers,” he said.
Since shuttering the brokerage, Dittmaier said he has been working with a forensic accountant to determine independently “what we are owed and what we owe others.”
He is also working with an attorney, who is aware of the involuntary bankruptcy petition, in hopes of reverting the involuntary Chapter 7 into a Chapter 11 in an attempt to reorganize.
“The attorney’s job is to confine the damage to the entity involved, CMA Freight Services,” Dittmaier said. “The trucking side, CMA Logistics, is healthy on its own.”
Filing a Chapter 11 bankruptcy petition would give CMA an opportunity “to pursue all of these non paying customers, many of whom are established companies that do have the ability to pay.”
“If we are successful at collecting from them, then everyone we owe will get paid,” he said.
A year ago in May, Dittmaier said he pumped in nearly $200,000 of his own money to keep the fledgling brokerage afloat.
“I brought that agent on because I knew he could sell and that growth was what was needed, but selling doesn’t matter much if the customers don’t pay,” Dittmaier said.
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