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E.T. Transport Interview with Lion Force Owner
- Thread starter Michael Ludwig
- Start date
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If it is the banks that foreclosed, secured creditors are always taken care of first. That's the law ... this is what happens when the banks are in politicians' pockets.
He is right - the payroll should be paid first but this isn't the reality.
He is right - the payroll should be paid first but this isn't the reality.
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Hmmmm? Where to begin. Firstly, I do not know the man but I am sure he is a decent fellow who truly loved his company and wanted nothing more than to see it succeed. However, it appears that he and his partners did not know the meaning of “ over extend”. I get the feeling that they wanted to be the next Pride Group, a large, flashy trucking company with beautiful terminals and huge, expansive fleets. It troubles me that at this point he now wants to blame others such as BDO for the late financial filings, the US tariffs, COVID, the downturn in the economy. Yes, they were all contributing factors to his demise, but they were also felt by every other trucking company, large and small and not everyone had to close their doors. Again, the bank, in this case RBC, is acting like a drug dealer, continuing to supply his addicted customer knowing that his product is doing irreparable harm. When money is flowing that freely and in such large amounts with nothing more than a signature, the recipient can forget that these loans actually have to be repaid, at least at some point in time. This is a case where more, and better legal/financial advice was severely needed. Had they remained in their old terminal and used profits to pay down debt, their rise to to top might have been achieved. A company that has only been in business for 10 years is asking for trouble trying to grow that quickly. I guess I am old fashioned, but “slow and steady” actual does win its fair share of races!
Comparing a bank to a drug dealer is scary accurate. Everything is good until the dealer cuts you off.
Also everyone thinks that if they get a loan once, they can just refinance that loan and get another. It works until it doesn't.
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"I get the feeling that they wanted to be the next Pride Group, a large, flashy trucking company with beautiful terminals and huge, expansive fleets." Yep, I kind of got that feeling too, and they got too focused on making that a reality and lost sight of what was really happening.
I think they definitely needed better, and sooner, legal advice. At one point in the video he says he spent over $700k on lawyers. IMHO, they weren't very good lawyers ... but then again, maybe they didn't have much to work with either.
What is that old saying? There are 3 sides to every story ... his, hers, and the truth. Seems applicable here.
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Unfortunately the Too Big To Fail theory applies only to Banks and industries with little to no competition and high barriers to entry.
Unless you're heavily liquid going in, trucking requires a lot of patience and basic knowledge of economics would do you a great service.
Unless you're heavily liquid going in, trucking requires a lot of patience and basic knowledge of economics would do you a great service.
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Or if your name is synonymous with a common household pet of the feline variety
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The other thing that bothered me about Harry’s mea culpa, was his boast regarding how much he knew about the trucking industry. For sure, operating 200+ trucks will impart a certain degree of knowledge, whether you want it or not, but really….only 10 years? I think I can speak for a few on this site who, like me, learned about this business working with and listening to the old boys who went before us, guys with 20, 30, 40, 50 years running iron up and down the road. Sorry, but 10 years is a bit too quick to have figured out how this business works. Perhaps the banks should have picked up on that……if their greed wasn’t clouding their vision.Or if your name is synonymous with a common household pet of the feline variety
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It's a pattern that just keeps continuing. Spot freight is like the saying - live by the sword, die by the sword. The only way to properly grow a trucking company is based on contract freight, long term relationships. And being disciplined with the money ...
I find this is what most of the trucking industry lacks.
I find this is what most of the trucking industry lacks.
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You mean no leased Lambo's and Bugatti's with the mini mega mansion a Rollie Daytona and a cottage in the Muskoka's is not normal for all owners? Take a ride around the GTA as it sure seems that is how it is done.. Until the bank calls ... and they sure seem to be calling.. no sad really.
I don't have the time to watch the video, but I did read through the receivership paperwork.
It looks like they were highly leveraged and teetering on the limits. Was the bank supplying crack? Well maybe, but from what I know about the bank, you don't get any money unless you can prove that you don't need it. Likely Lion Force had an outstanding 2021 fiscal year, and the books showed a large cash flow, cash reserves, AR and revenue stream. These are the books that were presented and leaned upon to get the funds in 2022/2023. The bank knows nothing about the industry and just use metrics to decide the amount of funds they can approve. (just like you can get approval for a mortgage online) The company owners, on the other hand, ought to have known that the bubble was not reproducible. Like @loaders said, 10 years does not give you the insight you need. The company could not reproduce the results, and the bank was worried about the KPI's that went way offside. RBC has been burned by dozens of not hundreds of other transportation companies in the past 3-4 years and they're not going to let it go. The loans are due for renewal every year and RBC decided to call the loan. The owners now have to get the cash from someplace - usually other investors or put the money in themselves. They were incapable of doing that.
The owners of Lion Force did not manage this well, RBC called in their chips and cashed out. If you're going to play like the big boys, you better have the funds like the big boys.
It looks like they were highly leveraged and teetering on the limits. Was the bank supplying crack? Well maybe, but from what I know about the bank, you don't get any money unless you can prove that you don't need it. Likely Lion Force had an outstanding 2021 fiscal year, and the books showed a large cash flow, cash reserves, AR and revenue stream. These are the books that were presented and leaned upon to get the funds in 2022/2023. The bank knows nothing about the industry and just use metrics to decide the amount of funds they can approve. (just like you can get approval for a mortgage online) The company owners, on the other hand, ought to have known that the bubble was not reproducible. Like @loaders said, 10 years does not give you the insight you need. The company could not reproduce the results, and the bank was worried about the KPI's that went way offside. RBC has been burned by dozens of not hundreds of other transportation companies in the past 3-4 years and they're not going to let it go. The loans are due for renewal every year and RBC decided to call the loan. The owners now have to get the cash from someplace - usually other investors or put the money in themselves. They were incapable of doing that.
The owners of Lion Force did not manage this well, RBC called in their chips and cashed out. If you're going to play like the big boys, you better have the funds like the big boys.