A heavily indebted Canadian trucking company has shut down after a court-appointed trustee assumed control of the Calgary, Alberta-based carrier and terminated 131 employees and contractors, most of them drivers.
People Express Transport, which specialized in hauling produce and meat in western Canada and the U.S., ceased operations on April 22, the day that a judge placed the carrier into receivership under Canada’s Bankruptcy and Insolvency Act. It had a fleet of about 150 trucks and owed CA$12.2 million ($10.1 million), according to court documents filed in the Court of Queens Bench of Alberta.
Charanpreet Brar, the founder of People Express and until recently its president, expressed dismay at the outcome, noting his “20-plus years of hard work to build this company” that he valued at over CA$30 million.
“I’m not sure what to say,” Brar told FreightWaves in a LinkedIn message. “We lost everything.”
The shutdown of People Express marks one of the largest publicly known trucking failures in Canada since the start of the COVID-19 pandemic. It’s unclear why trustees decided to cease operations rather than keep the business running while attempting to secure a buyer.
The trustee, Alvarez and Marsal Canada, declined to comment on why it shut down the carrier.
Instead, an asset liquidation has begun, beginning with the sale of 22 trailers, which received court approval on Tuesday.
Dispute with largest lender turned ugly
People Express was forced into receivership at the request of its largest creditor, Royal Bank of Canada (RBC.) The carrier owed the bank CA$10.7 million when Alvarez and Marsal assumed control of it in April.
The carrier’s relationship with RBC had deteriorated in the months leading up to the receivership, according to court documents. The bank had serious concerns about receivables being diverted to other financial institutions and the lack of visibility into People’s operations.
In February, the bank issued a notice to the carrier demanding repayment of the loan before petitioning a judge to force a receivership. The judge stayed the proceedings, and People Express and RBC began negotiating a settlement.
The company agreed to allow Alvarez and Marsal to step in as a monitor while it attempted to secure additional financing.
But by April, RBC “had lost complete faith” in People’s management despite a refinancing proposal from a third party, Albert Mason, a senior loan manager with the bank, wrote in an affidavit. Mason said the carrier had not provided sufficient visibility into its operations.
Bank ‘effectively holding a gun to our head,’ says former carrier president
People Express had attempted to secure a 30-day delay for the court-ordered receivership and give it time to file a notice of insolvency. Its plan, the carrier argued, would keep its personnel employed.
Brar declined to discuss what happened with his company. But in court documents, the company said that while business had been good during the pandemic, payments from customers had been slow at times.
In an April 19 affidavit, Brar defended the carrier’s actions regarding RBC, arguing it had been transparent, and accused the bank of bullying it during negotiations.
“RBC was effectively holding a gun to our head and threatening to cut off all financing and shut down such that we would be unable to operate our business,” Brar wrote.
Click for more FreightWaves articles by Nate Tabak.
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