Celadon doubles down on Hyndman liquidation as Canadian court fight looms

Celadon Group plans to sell Hyndman Transport’s Winnipeg terminal for C$4.25 million to a commercial real estate firm, but the deal likely faces resistance from a Canadian court over the company’s failure to initiate timely bankruptcy proceedings in Canada. 

The deal emerged in public filings in Celadon’s U.S. Chapter 11 bankruptcy proceedings late Thursday. The presiding U.S. federal judge approved Celadon’s request to sell the Winnipeg facility through an expedited process to Winnipeg-based Capital Commercial Real Estate Services. 

But Celadon’s prospects of a quick sale of the terminal as well as Hyndman’s Ayr, Ontario, headquarters appear increasingly dim. An Ontario Superior Court judge on Wednesday moved to bar the sale of any of Hyndman’s assets without his approval – a fact absent from the latest U.S. filings.

Justice Glenn Hainey’s decision – a preliminary instruction called an endorsement – came in response to a petition by a lawyer representing former employees and contractors of Hyndman Transport who are seeking more than C$2 million in unpaid compensation.

Hainey expressed his preference for Celadon to ask to have its U.S. Chapter 11 case recognized in Canada, a common practice in cross-border bankruptcies, and said he stood prepared to place Hyndman Transport into receivership to oversee the liquidation of its assets.  

Hainey also noted that he stood ready to impose the receiver in the event Celadon does not petition for the recognition. 

Under Canadian bankruptcy law, employees receive preferential standing as creditors for a limited portion of any unpaid compensation such as vacation pay and severance. It marks a key difference from the United States.

Any forthcoming Canadian proceedings, along with a court-appointed receiver, will likely slow down any asset sales in the interest in ensuring funds can be dispersed in accordance with Canadian laws.

While developments are good news for former Hyndman employees, they will undoubtedly create delays for U.S. creditors hoping for a speedy payout from any Canadian assets.  

Hyndman Transport shut down on Dec. 9 after Celadon filed for Chapter 11 bankruptcy in the United States. 

While Hyndman and Celadon’s Canadian holding company are part of those proceedings, Celadon kept its entities solvent in Canada – an unusual move for cross-border bankruptcies. 

A federal labor investigation into the dismissals of an estimated 400 Hyndman personnel, most of them drivers, is ongoing.