Case Study: Supporting Celadon in a Complex Bankruptcy Process

How Ritchie Bros. navigated the complexities and urgent needs of Celadon Group’s historic bankruptcy to deliver maximum returns.

When the Celadon Group, one of the largest publicly traded transportation companies in North America, was facing bankruptcy in late 2019, the company called on Ritchie Bros. to help navigate a complex process that involved many stakeholders and reached across multiple borders. Throughout 2020, Ritchie Bros. used its size and strength to provide Celadon an easy and agile recovery solution that no other company could offer.

By delivering an unrivaled suite of selling channels, operational reach, data insights and marketing power, Ritchie Bros. successfully provided Celadon and its stakeholders with higher than expected returns and seamless logistics.

Building a relationship with Celadon

Celadon and its stakeholders turned to Ritchie Bros. after the global equipment auction company impressed with their handling of the Graebel Van Lines bankruptcy. Graebel, the largest privately-owned moving company in the world, was planning an orderly shutdown and contacted Ritchie Bros. representatives to help avoid a calamitous operational stop that would endanger the livelihoods of its employees and put customers’ belongings at risk.

Ritchie Bros. had the insight and know-how to manage and solve, without creating panic. By getting assets into care and control, Ritchie Bros. prepared a plan to manage costs, save unnecessary expense and maximize returns. No other company could respond as swiftly, and with the operational performance as Ritchie Bros. Plus, Ritchie Bros. provided higher returns than if they had proceeded on their own elsewhere or taken cash offers.

Problem solving

Celadon’s situation was not dissimilar to Graebel in that it was facing bankruptcy with its assets scattered across the continent. A hard operational stop would create chaos for the company, and its thousands of employees, some of whom would be in mid-transport. Celadon’s debtors, primarily a New York-based hedge fund named Blue Torch Capital, did not want to proceed with bankruptcy until Ritchie Bros. had assessed the situation, while Celadon leadership hoped for an outright purchase of its assets. Ritchie Bros. convinced lenders and the company that it would be more advantageous to disperse asset through its multiple selling channels.

Facing challenges

An international transportation company is unique in the way that if it stops doing business, its assets would not be centralized and easily accountable. Also, Celadon wanted to avoid “spooking their herd” of drivers, keeping trucks and trailers on the road working until it was time to bring in the assets. A sudden seizure in business flow could lead to assets being difficult to recover.

While most bankruptcies are centralized events, Celadon had assets moving across multiple borders. It was going to take an international company with facilities and boots on the ground in the United States, Canada, and Mexico to properly recover assets, and eventually reduce them with a turnkey process.

Finding solutions

Ritchie Bros. used its permanent facilities across North America to receive assets, as well as take over the Celadon yard at Indianapolis in order to organize assets and plan for the Columbus, OH off-site dispersal auction.

Ritchie Bros. advised the Celadon Group on how to communicate to the drivers during a unique bankruptcy event like this, and make sure those drivers know the appropriate course of action with the assets. The locating and returning of trucks – key to the recovery process – was organized by Ritchie Bros. While Celadon went from 3,000 operational employees to around 180 in a matter of days, it was imperative to keep operations flowing. Ritchie Bros. also advised on proper personnel communication during a very sensitive time of year (mid-December 2019).

Having teams in all three countries proved to be instrumental in handling major logistical challenges. Ritchie Bros. staff in Mexico could handle the complexities of doing business in that country, while the Canadian team went out to pursue assets on location, making it easy for Celadon and its creditors. Despite this taking place in the middle of winter, Ritchie Bros. executed its plan with boots on the ground, handling the kind of logistics no one else could.

Selling strategy

The initial strategy to recover maximum value for Celadon assets was to sell half in live auctions through Ritchie Bros. Auctioneers and half through IronPlanet online weekly events. Being a multi-channel disposition company, Ritchie Bros. was able to be flexible in terms of what channels it could sell the assets through.

The major curveball of 2020 was the COVID-19 pandemic, disrupting plans starting in March. In order to keep customers and employees safe, Ritchie Bros. pivoted its business to online auctions only. This meant selling all Celadon assets through online auctions, either at Ritchie Bros. Auctioneer events or on IronPlanet. Pricing for Celadon assets proved to be stronger at online auctions with a live auctioneer.

During the selling process, Ritchie Bros. consistently communicated its progress with stakeholders. If Ritchie Bros. did not have the multiple channels to sell from, it would not have been able to pivot to 100% online auctions during COVID-19, and overachieve the way the company did. Leveraging channels like Private Treaty, IronPlanet, Ritchie Bros. Auctioneers was a big advantage for assets that were in remote locations. The ability to sell these assets online from where they were was crucial in maximizing returns.

Execution and results

One of the keys to earning Blue Torch Capital’s trust and effectively analyzing the Celadon liquidation was Ritchie Bros.’ valuation insights and data. This gave the confidence that Ritchie Bros. could get stakeholders the best returns possible. The team went through the entire inventory and put a valuation to each asset using cutting edge data and metric based on factors like make, model, usage, zip codes, and more. Having the best insights and data to determine heavy equipment and trucking valuations gave Ritchie Bros. the edge in determining whether selling via its auction channels would be more profitable than a straight purchase of all Celadon assets.

With Celadon anticipating $15-16 million recovery, Ritchie Bros. was proud to deliver over $22 million. This amount made all lien holders and trustees satisfied, as Ritchie Bros. maximized returns at minimal cost to the estate. To date, Celadon is the largest bankruptcy in trucking history.

Insight from source

“It was quite a project. Assets were scattered over 83 locations in 3 countries,” said Bill Collier, Territory Manager, Ritchie Bros. “Thanks to our network of yards in the US, Canada and Mexico we could facilitate Celadon drivers dropping off their trucks in the early stages of the bankruptcy. We used various carriers to round up close to 2000 assets, and then numerous banks and finance companies used our Celadon advertising power to add their Celadon pieces to our sales. The word “Celadon” became the most searched word on rbauction.com during a period in 2020. To date, we have probably sold over $30M worth of Celadon gear.”

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See also

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