Transportation Brief: Bankruptcy Filings on the Rise

by Gregory A. Ostendorf

October 31, 2019

The Firm’s transportation bankruptcy practice group has noticed an uptick in bankruptcies impacting transportation service providers.  Although there are always random bankruptcies creating collection issues or asserting preference claims against transportation service providers, the Firm has seen an increase in shipper and intermediary bankruptcies in the past six months.  This is similar to a trend that was identified in advance of the last economic downturn.  If the current trend continues, bankruptcy exposure avoidance will be a topic of concern for transportation service providers.  Minimizing exposure in bankruptcy requires quick action– i.e., requiring prepayment at the first sign of shipper/intermediary instability; filing immediately in jurisdictions that recognize critical vendor status; drafting pre-petition strict payment terms in contracts for customers in jurisdictions not having critical vendor status laws.  Careful planning and awareness of the issues is the best way to minimize exposure when your customers or trade partners file for bankruptcy.

Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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