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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