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Texas-based U.S. Logistics Solutions files for bankruptcy liquidation

U.S. Logistics Solutions Group of Humble, Texas, files for bankruptcy liquidation.

Posted on June 26, 2024

Texas-based U.S. Logistics Solutions has filed for bankruptcy liquidation, stating that its lender pulled the plug on its funding, which forced the company to shutter operations Thursday and left a disputed number of truck drivers, dock and warehouse workers, and sales and office personnel without jobs.

In a statement to FreightWaves Tuesday, a spokesperson for Ten Oaks Group, the private equity firm that owned the logistics firm, said the company is “deeply disappointed by the lender’s sudden decision to cease further funding for US Logistics Solutions, which left the company no time to provide advanced notice to employees or properly wind-down operations.”

As of publication Tuesday, the company spokesperson said that all USLS employees had received their final paychecks, but no date was given for when they were paid. It’s unclear whether the owner-operators and independent contractors who hauled freight for USLS were paid.

USLS of Humble, Texas, filed its Chapter 7 petition Friday in the U.S. Bankruptcy Court for the Southern District of Texas.

In its bare-bones petition, USLS lists its assets as up to $100 million and liabilities as between $100 million and $500 million. The shuttered company states that it has up to 5,000 creditors and that funds will be available for unsecured creditors.

USLS’ five-page petition, signed by Andrew Lovrovich, executive chairman of Ten Oaks Group, did not list the names of its top secured and unsecured creditors.

“The decision to file for bankruptcy was not taken lightly. The leadership team explored all possible alternatives to avoid this outcome, including seeking additional investment and strategic partnerships,” according to the company’s press release Monday about filing for Chapter 7. “However, the abrupt cessation of funding left the company with no other recourse.”

In February 2021, FreightWaves reported that Forward Air was selling its Pool Distribution unit to Ten Oaks Group for $20 million. The sale consisted of $8 million in cash and up to a $12 million earn-out dependent on financial performance.

According to its website, USLS was Ten Oaks Group’s first transportation acquisition. Ten Oaks Group, headquartered in Charlotte, North Carolina, acquired USLS, formerly Forward Air Solutions, and moved its headquarters from Greeneville, Tennessee, to Humble, Texas.

As of publication, some USLS customers say they have been unable to locate or retrieve their freight from the company’s 19 terminals scattered mainly around the Eastern part of the country.

The numbers game

Ten Oaks Group disputes the number of workers affected by the shutdown, stating that 2,000-plus is too high and that it only had 864 direct employees, 305 contractors and temporary workers, and 57 owner-operators.

In his LinkedIn post confirming the company’s closure Saturday, Eric Culberson, former president of USLS, stated that thousands of workers were left without jobs after it shuttered operations.

“Due to the abrupt decision by our private ownership group to close our doors at the same time business was surging, I am completely devastated and heartbroken for the 2000+professionals I’ve had the pleasure of working with,” Culberson wrote.

In a recent article posted on Samsara’s website featuring USLS, it stated that the company employed “over 1,600 drivers and warehouse workers to support their fleet of 570 trucks across 19 terminals.” FreightWaves sent a link Tuesday morning to Ten Oaks Group’s spokesperson asking why the numbers varied significantly from the numbers the private equity firm provided. Later Tuesday, the article was removed from Samsara’s website.

Ten Oaks Group, on behalf of USLS, also takes issue with the number of truck drivers and power units posted in FreightWaves’ article about the closure. However, the numbers used in the story were taken from USLS’ latest MCS-150 form filed with the Federal Motor Carrier Safety Administration and updated a month before the shutdown. The form states that it had 500 truck drivers and 732 power units.

Former employee files WARN Act lawsuit over mass firing

According to the Texas Workforce Commission website, USLS, a logistics company that provided last-mile handling and distribution of time-sensitive products, had not filed a notice of its impending closure prior to closing on Thursday.

A former employee of USLS filed a class action adversary proceeding complaint in bankruptcy court Monday, claiming the logistics company violated the federal Worker Adjustment and Retraining Notification (WARN) Act, which requires companies with more than 100 employees to provide at least 60 days’ written notice before a mass layoff or planned shutdown.

Robert Munro worked at the Atlanta facility until his employment was terminated on Thursday, the same day USLS notified its workers that the company was ceasing operations. In his complaint, which seeks class action status, Munro claims that he and other USLS workers “are entitled under the WARN Act to recover from [USLS] their wages and ERISA benefits for 60 days” and should also receive accrued vacation pay.

In some instances, the WARN Act makes an exception for mass layoffs caused by business circumstances that were not “reasonably foreseeable at the time that 60-day notice would have been required.”

This is a developing story.


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