Consolidated Freightways filed for bankruptcy Sept. 4 and laid off 15,500 employees.
The less-than-truckload company, which started truck-maker Freightliner in Portland, Ore., more than 50 years ago, employed 20,000 truckers and operations personnel and had 350 terminals in the United States, Canada and Mexico. The company had more than 30,000 over-the-road trucks and vans.
In a press release, the company said, “in order to assure the orderly liquidation of the business – it planned to file petitions for Chapter 11 bankruptcy.”
Of the 15,500 employees impacted by the CF shutdown, 80 percent received termination notices immediately, the company said. The remaining management and supervisory positions were planned to be phased out later. Operations of CF AirFreight and Canadian Freightways will continue, and employees of those subsidiaries will not be terminated.
The company had revenues of $2 billion in 2001, but lost more than $100 million. It was ranked eighth by revenue on Commercial Carrier Journal’s Top 100.
The 73-year-old Vancouver, Wash.,-based company, which has been in financial straits since last fall, told employees in a recorded telephone message Sept. 2 of its plans to file for Chapter 11 bankruptcy and liquidate its assets. Drivers and freight terminal employees were told to call a toll-free number to hear the bad news from CEO John Brincko, company officials said.
In letters mailed to employees, the company said it had “been vigorously exploring ways to restore the financial health of the company. We expected that recent discussions with our banks, other lenders and real estate investors would enable us to obtain significant additional financial resources and that, together with the combined efforts of employees, we would be successful in our restructuring efforts.
“Unfortunately, this has not been the case. Nor do we have the current resources necessary to sustain the business without additional financial resources.”
Brincko told employees he was initially hopeful he could turn the company around, despite restrictions imposed on the credit, insurance and real estate markets since Sept. 11 last year. But Brincko said when one of the company’s surety bondholders recently canceled coverage related to the company’s self-insurance programs for worker’s compensation and vehicular casualty, it negatively impacted discussions with all lenders and investors. The company was unable to secure financing and to bridge the surety bond gap. CF expected a second insurer to also cancel coverage.
“Without the availability of further financing, the board of directors reluctantly concluded that the company simply could not continue to operate, pay employees and meet its obligations,” Brincko said.