Some saw it coming. For others, it was a bombshell. Regardless, the reality is that New Century Transportation announced on June 9 that it would be closing and filing for bankruptcy. More than 1,500 employees were subsequently terminated.
A provider of national truckload and less-than truckload services throughout the U.S. and Canada since 2000, New Century recently was ranked No. 99 in CCJ magazine’s Top 250 and was also ranked among the top 101 trucking companies for 2014 by Global Trade magazine.
In its announcement, New Century stressed that it had diligently tried to find solutions to deleverage its balance sheet but that a consensual agreement could not be reached. After consultation with legal and financial advisors, a bankruptcy proceeding was deemed to be the best way to maximize value for its creditors.
Chief Executive Officer of New Century Terrence M. Gilbert stated:
“First and foremost, it is with great sadness that we make this announcement. This difficult decision follows a comprehensive strategic and financial review of the business. The Board of Directors has determined that the actions we are taking represent the best alternative under difficult circumstances. We are extremely grateful to all of our employees for their dedicated service to the Company. We are committed to treating those who are affected by these events with the respect and dignity they deserve and will support them as best we can in their transition.”
Some of New Century’s truckers say they received letters from the company advising them of the closure, but others say they were still on the road or actually had just driven into the Burlington County, N.J. headquarters of the company when they first heard about it. In hindsight, the closing was foreshadowed by New Century’s accreditation being pulled from the Better Business Bureau recently. “I knew this was coming last week,’ said Bert Williams, a driver from North Carolina. “I saw on the Better Business Bureau website that our rating had been pulled … I knew something was up.”
With a reported $273 million in revenue as recently as 2012, New Century had about 1,000 drivers among its 1,500 employees along with 1,000 power units. The company’s bankruptcy documents say it has between 200 – 999 creditors, between $10 million and $50 million in assets and between $10 million and $50 million in liabilities.
Spurred on by a continuing driver shortage, carriers were quick to recognize the potential for acquiring experienced employees, however. “Greentree Logistics, of Greenfield, Minn., with sites in Kulpsville and other Northeast and Midwest locations, is ‘expanding and looking to hire 80 drivers,’ and ‘would love to hire some of their former drivers if possible,’ said Liz Mazmanian, a representative of the company. Kevin Mast, owner of Mast Trucking in Millersburg, Ohio, also expressed interest in the former New Century drivers for his 90-truck refrigerated-trucking service. Jason Cardoza of national driver-recruiting firm Truckers America says he’s reaching out to the laid-off New Century drivers.
New Century is working with other companies to get its freight delivered. It also reportedly provided rides for its drivers to the nearest bus station, so they would not be stranded on the road. When Arrow Trucking shut down in 2009, stories abounded of truckers stuck across the country with no fuel and no money to get home.
With words that turned out to be prophetic, Brian J. Fitzpatrick, the CFO at New Century Transportation, said of the trucking industry at a recent meeting of the Rutgers Business Outlook on June 3 in Cherry Hill, NJ, “It’s really, really challenging to operate in the Northeast.” He referenced high bridge tolls, the cost of fuel, road congestion and attracting drivers as some of the reasons for that challenge.
In a letter sent to its employees about the closing, New Century wrote, “The unforeseeable need to shut down operations arose when New Century Transportation’s lender recently and unexpectedly declined to continue funding regular business operations.
“The company immediately took steps to seek financing and other alternatives, including a sale of all or part of the company… The company reasonably believes that it could not have provided earlier advance notice of the shutdown because advance notice would have precluded NCT’s ability to secure alternative financing or a sale of the company.”
An eight-year veteran of the company, New Century driver Stephen Shivley, 56, said of the closing, “This is sad. I’ve been doing this for 33 years. I saw the handwriting on the wall. I knew there were problems, but I was going to stay until the end.”
Meanwhile, another New Century driver Robert Kearney has filed a class-action lawsuit over the mass dismissal. He claims the company violated the federal Worker Adjustment and Retraining Notification (WARN) Act, along with the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act, when it did not give drivers a written notice 60 days prior to their termination. The lawsuit seeks 60 days of wages and benefits along with severance pay for lost wages. That translates into one week of pay for each full year of employment.
The WARN Act became effective in 1989. WARN offers protection to workers and their families by requiring employers to provide 60 days’ notice in advance of plant closings or mass layoffs. There are certain exceptions, however:
- Faltering company: This covers situation where a company sought new capital or business in order to stay open and where giving notice would have ruined the opportunity to get the new business. It applies only to plant closings.
- Unforeseeable business circumstances: This applies to closing and layoffs caused by business circumstances that were not reasonably foreseeable at the time;
- Natural disasters.
If an employer relies on one of these exceptions after not providing at least 60 days’ notice, the burden of proof that the conditions for the exception have been met are its to bear. Any employer who violates the WARN provisions is liable to each aggrieved employee for back pay and benefits for the period of violation, up to 60 days.