We don't need you

USLS operated 19 terminals, mainly on the Eastern side of the country, prior to shuttering operations.
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Forward Air is out of business then.

 

I wonder how these hedge funds get away shutting down, violating the WARN Act?

 

They can just pay you 60 days pay to satisfy the WARN act, or put 60 days pay/per employee on their bankruptcy petition.

 

Private Equity firms are the kiss of death to any business they touch.

 

CFO was from YRC

 

"professional managers" who don't bother to know if they are managing a factory in Berlin or an Air BnB in Congo. Fire 10% of the staff and double the rates for "the product".

 

Sounds like politics to me. Close one company, move all the profitable pieces to another, with a handshake and a cigar. Laugh about it while hundreds scramble for new jobs.

 

Probably spent the payroll money on bonuses for the board of directors.

 

First thing is they don't worry about the penalty. Say payroll for 60 days is $40 million. Running the operation would cost another $30 million. Projected revenue is $69 million. They're going to lose $1 million over 60 days. Once they issue the WARN notice, revenue will drop to nothing in a hurry, as will some variable costs like fuel, but every purchase is going to need to be cash so it's a bit of a wash. They go from losing $1 million to losing $50 million.

Abruptly shutting the doors cuts the non payroll costs to $10 million, so they're still out $50 million. The difference is they still have accounts receivable coming in and they're not burning any cash that's left. These numbers are barely roughed in guesses, but you get the idea - shutting down and paying fines/penalties on top of the payroll can be cheaper than going through the motions.

The next part of Ten Oaks thinking is that they're not going to be paying anything. DOL or a class action lawsuit would be needed. DOL might make some noise, but isn't going to blow their budget trying to get blood from a turnip, same thing for most lawyers. They know that even if they get the judgement, there's only going to get a tiny slice of a miniscule pie.

And that's IF they get a judgement. Ten Oaks is going to argue that they thought they could obtain an operating loan and at the "last minute" the deal fell apart. They'll also make noises about losing customers or contract endings/renewals causing "unforseen financial impacts".

The only way to give the WARN Act any real teeth is if the corporate veil gets pierced if it gets violated. Then Ten Oaks could be held liable for not just the wages but also all the other outstanding debts.

I'd also argue that private equity groups like Ten Oaks should be held liable for all the debts of their holdings. I think that would significantly reduce the frequency of viable companies being plundered of their valuables while simultaneously being loaded with debt. I'd love to have a forensic account with unfettered access go through this whole deal because I guarantee that's what happened.