A California company is now at high risk of bankruptcy after owing a lender as much as $1.8 million, sources report.
California Intermodal Associates, a family-owned trucking company and brokerage, has shut down its operations, but has not decided whether to file bankruptcy, reports TheStreet.
CEO Gabriel Chaul told The Street that he has hired lawyers to advise him on his next steps, which could include a Chapter 11 or Chapter 7 bankruptcy, but no decision has been made yet.
The company owes as much as $1.8 million to a lender, Chaul said.
“We’re still exploring all the possibilities,” Chaul said in a phone interview.
The Commerce, Calif.-based shipping company provides intermodal services with its port and rail divisions, as well as warehousing facilities.
The company, founded 25 years ago, employed 30 drivers, but it was the company’s forced conversion from using independent contractors to employee drivers in 2022 that led to the company’s financial distress and eventual demise.
California Assembly Bill 5, which became law Jan. 1, 2020, required certain businesses, such as trucking companies, to classify workers as employees instead of independent contractors, costing businesses much higher expenses.
Chaul blames the AB5 law for forcing his company out of business.
Chaul said his company began complying with the law in summer 2022, but as soon as his company began complying with the law, its expenses began rising, it’s rates increased 25% to 30% over the competition and customers stopped doing business with them.
“The phone stopped ringing,” Chaul said.
California Intermodal Associates also has found it impossible to compete with many trucking companies since a lot of them are not complying with the AB5 law and the state government is not enforcing the law, Chaul said.
“Other trucking company owners are afraid because they didn’t do what we did to stay compliant,” Chaul said.
Chaul began the company with his father 25 years ago and it has expanded in partnership with his brother, nephews, nieces and other family members.
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Also Read: A Massive Grocery Chain With 400 Stores Is Now Closing
Other Economy News Today
A massive shoe retailer now announces a new wave of layoffs to hit headquarters this summer, affecting over 700 employees.
Nike has announced its ‘second phase’ of mass layoffs, effective June 28, according to a Worker Adjustment and Retraining Notification (WARN) filing.
A total of 740 employees will be impacted in the retailer’s home state.
The layoffs are part of the 2% workforce reduction Nike announced in February, which is taking place across two phases, the company confirmed via email.
Nike said job titles and the number of employees in each category would be provided at a later date, once the company has determined them.
Bumping rights are not available for the impacted employees, reports Retail Dive.
“Nike’s always at our best when we’re on the offense. The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger,” Nike said in a statement.
“While these changes will impact approximately 2% of our total workforce, we are grateful for the contributions made by all Nike teammates.”
The layoffs are tied to a cost-savings plan Nike unveiled in December, which is aimed at generating up to $2 billion in cumulative savings over three years.
Based on the company’s last annual report, the layoffs to 2% of its total workforce will impact more than 1,600 people.
Savings from the plan are set to be reinvested in driving growth, innovation and profitability.
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Also Read: A Massive Grocery Brand Now Files For Chapter 11 Bankruptcy
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