Maple Leaf Motoring: Celadon wants US bankruptcy recognized in Canada

Maple Leaf Motoring is a weekly rundown of developments in the world of Canadian transportation. This week: Celadon pushing for Canadian recognition of Chapter 11; transport and warehousing showed surprising resilience during GM strike; and truckload of cannabis stolen.

Celadon Group is seeking to have its U.S. Chapter 11 bankruptcy proceedings recognized in Canada, court filings show. But an ongoing federal investigation into the dismissals at Hyndman Transport might complicate that.

Celadon will petition an Ontario court, likely the Superior Court of Justice, to have the U.S. bankruptcy recognized as the primary proceeding, according to documents in Celadon’s Chapter 11 case underway at U.S. federal bankruptcy court in Delaware. The U.S. firm could have made a filing in Canada already, but if it has, any documents or rulings have yet to be released publicly.

Canadian creditors and former Hyndman Transport workers, and their lawyers, will be following the developments closely. Ex-Hyndman personnel have been discussing their legal options following the Dec. 9 dismissals related to Celadon’s Chapter 11 filing.

Hyndman Transport is part of the U.S. proceedings. But the absence of a Canadian filing has left former workers struggling to make claims for any owed compensation.

Cross-border recognition of bankruptcies is common on both sides of the border. But a large consideration will likely be the interests of former workers at Celadon’s Hyndman Transport. As FreightWaves reported on Dec 24, federal authorities are investigating the dismissals of drivers, mechanics and other staff as a collective termination.

A key difference in U.S. versus Canadian bankruptcy law is the preferential standing of former employees as creditors to claim any compensation such as severance, vacation pay and wages in lieu of a required layoff notice.

Canada’s Bankruptcy and Insolvency Act provides for cross-border recognition of foreign bankruptcies. Judges frequently approve such requests, particularly in cases involving complicated multinational operations, but they have no obligation to do so. Furthermore, Canadian judges have a wide degree of latitude about how they decide to recognize a U.S. proceeding.

Don’t be surprised if lawyers for former Hyndman personnel come out the woodwork and request separate Canadian proceedings. 

Transportation and warehousing showed surprising strength during GM strike 

Source: Statistics Canada

Canada’s transportation and warehousing sector increased during October in monthly GDP figures despite the disruption of the GM strike in the U.S.

The sector increased by 0.6% percent in October, according to the latest GDP in industry data released by Statistics Canada on Dec. 23, reversing four months of declines. Trucking was essentially flat, increasing by 0.16%.

The strike at General Motors plants in the U.S. hit Canadian supply chains during the month. The impact hit a variety of connected sectors but not transportation.

It’s probably best not to read too deeply into a single month of data, even if it is unexpected.

“It was surprising to see a break from the downward trend in the sector given the GM headwinds. Whether this uptick can persist is an open question — the CN strike will weigh on the rail sub-sector next month,” TD Bank Senior Economist Brian Depratto wrote in an email to FreightWaves.

Truck full of cannabis stolen

A truck carrying a Toronto company’s cannabis shipment was stolen from an unnamed carrier’s facility. 

Aleafia Health said it learned the theft happened on Dec. 20 after receiving notice from the carrier.

Aleafia did not disclose the value of the shipment. Though cannabis is a particularly valuable target, cargo theft is a huge problem in Canada.