Arnold Transportation Services, a trucking company with a history dating back to 1932, has ceased operations, leaving 341 truck drivers and 402 power units idled, according to the Federal Motor Carrier Safety Administration (FMCSA). The closure, which occurred around April 25th, has sent ripples through the freight industry and left former employees without jobs and benefits.
The shutdown of Arnold Transportation Services is linked to broader financial difficulties within its parent company, Pride Group. FreightWaves reported earlier this year that Pride Group is facing over $637 million in debt and was seeking bankruptcy protection. According to Pride Group CEO Sulakhan “Sam” Johal, the company, founded in 2010, had been profitable until the pandemic. However, the subsequent downturn in the trucking industry made it impossible for the family-owned business to manage its debts.
Sudden Closure and Driver Layoffs
Former drivers of Arnold Transportation Services reported abrupt layoffs without any prior notification on April 25th. Adding to the hardship, their medical benefits were also terminated immediately. This sudden closure left many employees in a precarious situation, struggling to find new employment and maintain essential healthcare coverage.
In legal filings related to the bankruptcy, Arnold Transportation Services listed its assets as being worth up to $10 million, while its liabilities ranged between $10 million and $50 million. The Chapter 7 bankruptcy petition, filed in Delaware, indicates that there are up to 199 creditors who may be eligible for distribution of funds. Navraj Johal is named as the sole director of the now-defunct firm. Arnold Transportation Services had been providing regional, dedicated, and expedited freight services for decades.
Regulatory Compliance and Safety Record
The Texas Workforce Commission website indicates that Arnold Transportation Services filed a WARN Act notice on Wednesday, acknowledging the layoff of 157 workers. This notice came nearly a week after the actual closure. Under the WARN Act, companies with over 100 employees are typically required to provide a 60-day advance notice of planned shutdowns.
According to FMCSA data, Arnold Transportation Services was granted common and contract carrier authority in 1981. While its Bodily Injury Property Damage coverage was set to be canceled at the end of May, its surety bond coverage remained active at the time of closure.
Prior to ceasing operations, Arnold Transportation Services had undergone 270 truck inspections in the preceding 24 months. Of these, 60 trucks were placed out of service, resulting in a 22.2% out-of-service rate, slightly below the national average. Driver inspections showed a better performance, with only 11 out of 432 drivers placed out of service, a 2.5% rate, significantly lower than the national average. However, the company’s trucks were involved in four fatal crashes, 10 injury crashes, and 17 tow-aways in the past two years, raising concerns about safety despite the inspection rates.
Pride Group Connection and Bankruptcy Proceedings
Court documents reveal that the decision to file for Chapter 7 bankruptcy was made based on legal and financial advice, deemed to be in the best interest of Arnold Transportation Services, its creditors, employees, and stakeholders. This move also included seeking to dismiss or withdraw pending Chapter 15 cases related to Pride Group.
Pride Group itself is facing creditor protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) after facing lawsuits from Mitsubishi HC Capital. These lawsuits allege default on payments guaranteed by Pride Group, with Mitsubishi HC Capital seeking damages of $100 million. The financial troubles of Pride Group have clearly had a cascading effect, leading to the closure of Arnold Transportation Services and highlighting the ongoing challenges within the freight and transportation sector.
