California trucking company and its subsidiary file for Chapter 11 bankruptcy
News that Miranda Logistics Enterprise Inc. and its sister company, Grit & Gravel Inc., filed for Chapter 11 bankruptcy sent shockwaves through the trucking world in California. The family-owned, Los Angeles-based companies, specializing in earthwork, excavation, and demolition, are now facing major financial hurdles that could have significant ripple effects for their employees, customers, and creditors.
Here is an outline of what happened and what this might mean for you especially if you have links to these companies.
Why did Miranda Logistics Enterprise file for bankruptcy?
At the heart of Miranda Logistics’ bankruptcy is a failed factoring agreement with Mission Valley Bank (MVB). Factoring agreements allow businesses to sell their receivables for immediate cash, but according to court filings, this one backfired.
- Miranda Logistics claims the agreement placed 100% of the financial risk on the company if customers failed to pay.
- By December 2024, MVB reportedly began contacting customers directly, demanding payment, which left Miranda Logistics unable to manage its cash flow and even make payroll for its employees.
- The trucking company stated it owed $2.8 million under the factoring agreement, while MVB held liens against its receivables and equipment valued at approximately $10.6 million.
These cash flow issues forced the companies to file for Chapter 11 bankruptcy in an effort to restructure their debts and seek relief from creditors.
How will employees be impacted by the bankruptcy?
The most immediate effect of this bankruptcy has been felt by the employees of Miranda Logistics and Grit & Gravel.
- According to court documents, Grit & Gravel ceased operations and terminated all employees on December 28, 2024.
- Miranda Logistics was unable to pay its workers, with a payroll shortfall of around $27,000, which directly affected employees’ ability to meet their financial obligations.
- As of now, the fate of remaining employees at Miranda Logistics is unclear as the company seeks to reorganize.
If you are an employee of either company, this means you may have to explore other job opportunities or wait for the bankruptcy process to determine the future of the businesses.
What does this mean for customers?
For customers of Miranda Logistics and Grit & Gravel, the situation is equally concerning.
- When MVB began contacting customers and demanding payments, it created confusion about where payments should be sent. This disrupted the company’s operations and its ability to serve its clients.
- Customers relying on these companies for transportation or excavation services may now have to look for other providers, potentially delaying projects or increasing costs.
If you are a customer, you might want to contact the companies directly or consult a legal advisor to understand how this bankruptcy filing could affect your contracts or projects.
Who are the creditors affected by the bankruptcy?
Bankruptcy filings show that the two companies owe millions to various creditors.
Miranda Logistics estimates its liabilities between $1 million and $10 million. Mission Valley Bank is listed as the largest unsecured creditor, owed $3.5 million.
Grit & Gravel also was indebted for considerable amounts, including nearly $2.5 million to Mission Valley Bank and more than $670,000 to Clean Harbors Environmental.
Creditors may have to wait patiently to see what the bankruptcy court decides on asset distribution. While Chapter 11 allows a company to reorganize and proceed with its business, it is anyone’s guess how much the unsecured creditors will receive from the reorganization process.
What is next in the bankruptcy process?
Legal proceedings of this case are still underway, but major dates are pending:
- A creditors’ meeting is scheduled for January 29, 2025.
- The status hearing has been set in the case of Miranda Logistics and Grit & Gravel for February 13, 2025.
These hearings will be great determinants in the course that the companies’ future and the management of debts will take.
