Longbow Freight Systems

Longbow Freight Systems Ltd

Just recieved in the mail this morning a notice from Perry Kreiger and Associates that Longbow Freight Systems has filed Notice of Intention to Make Proposal on March 3 under the Bankruptcy and Insolvency Act.
The Canadian version of Chapter 11

FYI
 
Jim L said:
Thanks for the detail on this. Can you also place the gerneral information in the "Government Regulations on Bankruptcy's" for futher reference?

We are owed $ from Longbow and was told today by the VP of Longbow about the above process. He also said that values of $1000 or less are not subject to the above process. Can you concur with that statement or was that just a ploy to get out of the conversation?
Click to expand...

I don't understand his $1000 comment. Only unsecured creditors over $250 have regulated status as follows:

Calling of meeting of creditors

51. (1) The trustee shall call a meeting of the creditors, to be held within twenty-one days after the filing of the proposal with the official receiver under subsection 62(1), by sending in the prescribed manner to every known creditor and to the official receiver, at least ten days before the meeting,

(a) a notice of the date, time and place of the meeting;

(b) a condensed statement of the assets and liabilities;

(c) a list of the creditors with claims amounting to two hundred and fifty dollars or more and the amounts of their claims as known or shown by the debtor’s books;

(d) a copy of the proposal;

(e) the prescribed forms, in blank, of

(i) proof of claim,

(ii) in the case of a secured creditor to whom the proposal was made, proof of secured claim, and

(iii) proxy,

if not already sent; and


(f) a voting letter as prescribed.

The voting on the proposal is dependent on:

Voting system

(2) For the purpose of subsection (1),
(a) the following creditors with proven claims are entitled to vote:

(i) all unsecured creditors, and

(ii) those secured creditors in respect of whose secured claims the proposal was made;


(b) the creditors shall vote by class, according to the class of their respective claims, and for that purpose

(i) all unsecured claims constitute one class, unless the proposal provides for more than one class of unsecured claim, and

(ii) the classes of secured claims shall be determined as provided by subsection 50(1.4);


(c) the votes of the secured creditors do not count for the purpose of this section, but are relevant only for the purpose of subsection 62(2); and

(d) the proposal shall be deemed to be accepted by the creditors if, and only if, all classes of unsecured creditors vote for the acceptance of the proposal by a majority in number and two thirds in value of the unsecured creditors of each class present, personally or by proxy, at the meeting and voting on the resolution.

Perhaps they are attempting to create a class of unsecured creditors under $1000 to propose paying them a higher percentage of the debt to remove them from the voting, or encourage them to vote on the proposal.

Remember, for their proposal to be successful, at least 51% by number of unsecured creditors must be in favour, with combined amounts over 66.7% of all outstanding.
 
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Basically we are alled screwed.........another broker spending money that belongs to the carrier. We will vote to put them out of business as they do not belong in the industry.
 
As one of the owners of Longbow Freight Systems, I feel the time is right to address this thread and make comment on the questions posed here to clarify things and avoid further speculation.

First of all, I want to say I appreciate the fact that this thread has not turned into a witch hunt. Longbow Freight Systems has been around for almost 10 years now, and during that time, we have maintained what we feel is a reputation as one of the premier freight brokers in this industry, and it is only now that this reputation is being tested, due to what can only be described as the most difficult economic times, globally, of our generation.

Between the end of fall of 2007 and the summer of 2008, Longbow, due to the bankruptcies of several of our clients, incurred a considerable amount of bad debt. Throughout this process, we maintained excellent relationships with our carriers by floating that bad debt ourselves and ensuring our carriers were paid, even though we were not, which is as it should be. Through what was one of our busiest summers on record, we optimistically went into the fall season expecting to be able to continue to float that bad debt and slowly recover through increased sales and a continued focus on providing our customers with high levels of service. Unfortunately, during the latter weeks of 2008, the economic slow-down that has affected virtually every company in this industry, began to take it’s toll on Longbow as well. As we headed into January and February of 2009, we experienced a sudden and unexpected drop in business and the gap between our receivables and our payables grew to the point where we needed assistance in continuing to operate. The owners of this company, with the assistance of our accounting firm, put together a proposal to our bank to further finance our company through this sudden turn of events. That proposal was presented to the banks at the end of February, and we were optimistic that it would be accepted. Unfortunately, and to our surprise, as of the morning of Monday, March 2nd, we were declined by our bank for financing, due to what they described as a reluctance to lend money to this industry.

At this time, we have been left with only 2 options. Option 1, was to simply close our doors. We have no intention at this time of doing so. Option #2, was to present a proposal to our creditors under the bankruptcy and insolvency act, to pay back to our creditors a percentage of what is owed, over a specified period of time. At this time, this percentage and time frame is unknown to me, as we are reviewing our cash flows with our accountant and the trustee in order to ensure the proposal is a viable proposal.

The details of the proposal are forthcoming within the next 7-10 days, and we hope that they are as well received as can be expected. The voting process requires that 51% in number and 2/3 in dollar value, of our creditors, agree to the terms of this proposal, upon which time the proposal passes and we are given the opportunity to honor the proposal and move forward to rebuild this company, and the relationships that we have valued for 10 years.

It is at this time, that Longbow Freight Systems wishes to express our regret not only that we are finding ourselves in this position but more so that we are contributing to the financial stress of a great many of our valued carriers, whom have done nothing but a great job representing us for almost a decade. Having been on the receiving end of this in the recent past, we understand fully that many of our valued suppliers are very unhappy with the current situation. This is not someplace that we wish to be, and certainly never expected it to come to this, however it is what remained as the only option to secure the future of our carriers, our customers, our employees and our company. We hope that you feel the same, and we hope that you accept the proposal in good faith that we can rebound from this and move ahead.

Sincerely,

Marv Wilder
 
Marv I have a few questions for you:
1. Is your house mortgaged to the max? Do you have a cottage/vacation property and is that mortgaged to the max?
2. What kind and how many vehicles do you own or lease?
3. Have you been getting a pay cheque?
4. Do you stand to loose everything?
5. Is your proposal that you will pay us 100% and take 3 years interest free to do it?
My feeling is that we will all be offered 10 cents on the dollar and you hope that people will fall for that and you can go on your merry way. This is the dumbest bankruptcy law in the world, if you can't pay your debts you should loose everything, cannot go into business for seven years and cannot have any say in financial dealings of any company you do work for. But my guess is that we will be seeing a new company emerge (say Shortbow) selling freight on the link in the near future - or that has already happened and nobody has found out yet. As you can probably tell I'm pretty upset about your post why should I take a very large haircut so you can stay in business?
 
Marv,

I have a receivable owing from Longbow - we have dealt with you for many years now. I appreciate you coming forward and addressing other concerns - whether the comments are positive or negative - at least you provided a response, an update and your intentions. Many carriers/brokers would just let this slide - leave people in the dark and not address anyone -the cowardly way.

I hope Longbow is able to refinance, readjust and pickup eventually. When times get tough - those that work with you and stand beside you are the true reputable business people in this industry. No one needs slander and hot head comments when they are going thru difficult times. Everyone has been through financial crunches at some point - which we all tend to forget when business is good. Thank you for the post.
 
The true reputable people in this industry are the ones that provide good service and more importantly pay their bills. Longbow owes at least $1,002,845.00 to people who took their loads because they where a reputable company. If they are reputable they will pay back 100% of what they owe over time but my guess that will not happen. I'm willing to bet if they phoned everyone they owed money to and worked out a monthly payment plan and stuck with it everyone on the list would stand by them. But when you are looking at pennies on the dollar I wouldn't stand too close because it tells everyone that you do not see anything wrong with what they are doing.
 
Longbow Freight Systems Ltd

It is indeed unfortunate that your company finds itself in these dire straits. I think it's admirable that you post your comments here in explanation of events that have transpired of late, and what may be about to happen. Indeed, paying the carriers involved with your bankrupt customer's unpaid freight, was probably done with the best of intentions. I have been in those same circumstances.

You wrote, "we maintained excellent relationships with our carriers by floating that bad debt ourselves". If you or the other owners have floated this bad debt yourselves, how is it that there's insufficient funds from your trust account to pay carriers that did the work that you've been paid for since then? Being a competent, experienced business person, surely you must be floating that bad debt with your personal or your fellow owners personal funds. If your providing that float with the surplus funds of your trust account (if you have one), or with shareholder's investments back into your company, then your current creditors should have no risk other than the payment terms you have established with your customers, and forcing your current creditors to wait along with you for your customer(s) to pay.

If, on the other hand, you've had to float some or all of that bad debt with non-surplus monies from your accounts receivable, you may be guilty of misappropriation of those funds to the detriment of the carriers not involved in moving your bankrupt customer's freight. This of course would make you and your fellow owners/directors personally liable for any money due carriers whose funds were not held in trust. Are you and your fellow owners going to list your personal net worth in the materials presented to your carriers? If you've operated without the benefit of a trust account, then at least 50% (assuming your married) of your personal net worth will become available to assist with getting those carriers paid.

I understand the desire to keep an otherwise great company afloat, however, the moment you realized that you had a serious unfunded liability, you became technically insolvent. Carrying on without an immediate injection of sufficient capital in the hopes that increased sales and any other efficiencies you could devise to increase your gross margin,will have knowingly put the carriers that have done work for you subsequent to your bankrupt customers at risk.
 
I agree with Activet on this unfortunate matter. The owner of Longbow deserves credit for having the fortitude to explain his firm's present predicament on this sometimes hostile site. Like any other company, a load broker must handle his cash flow in a prudent and responsible fashion. During profitable business cycles, why not keep some of the profits in the business, in the event a customer fails or some other unforseen disaster. This is truly a regretable situation for all of the parties involved and no amount of "hindsight advice" will rectify it now.What troubles me, is that we will most likely see more of this as the year progresses.
 
I don't think the intention of this site is to be hostile, but to have people communicate in a proper manner or a decent manner.
interesting thread.
 
Unfortunate Situation

This really is an unfortunate situation. I don't really know any details other than what I've read here. It sounds like an unfortunate series of events that that lead to Longbow's problems. I do commend them for at least trying to work out a deal. Many companies just close down and start up the next day with a new name. I really sympathize with them.

I also sympathize with anyone who doesn't get paid. However, it's not personal, it's business. Longbow's been around for a long time and I'm sure didn't do it on purpose. He's not one of those fly by night guys who intentionally tries to rip people off.

There are very few other businesses where if your business fails you are personally liable. The ramifications of this to the business owner's family are tremendous.

First let me say a few words about trust accounts. It is almost impossible to keep a strict trust account as you would imagine it to be. Firstly, carriers expect to be paid in 25- 30 days. Shippers pay in 30-60 days. You have to pool all the monies and manage the payables like any other business does. Trying to match shipper payments to carrier payments would be a nightmare. What happens if the shipper doesn't pay? Is the broker not suppossed to pay the carrier?

Can you imagine if our accounts payable person told your accounts receivable person "Sorry, we can't pay you yet, we haven't received payment from the shipper yet"

I would prefer we went with a posted bond like in the US. Instead of the trust account requirements. It makes much more sense and it guarantees there is at least some money there to make sure carriers get paid.

I know carriers are going to jump all over me for saying this, but consider...

If you own a trucking company and broker freight or interline or give loads to partner carriers, etc... you are also subject to the trust account requirements. If by some sequence of unfortunate events you got into financial difficulties, your personal assets would be at risk under the trust account regulations. I don't know, maybe you're OK with this, but it's pretty scary as a business owner.
 
Lets all give our heads a shake.

As I follow this post with the interest of an "involved party" I see some disturbing trends taking shape. First we have the owner of Longbow actually having the nerve to come on this site and try to explain himself. Then we have people praising him for it and sympathizing with his situation. I'm sorry but anyone who basically screws people out of over a million dollars gets no sympathy from me. Obviously from your post Pablo, you are a freight broker as well. That would explain how you feel that it’s just not fair and downright “scary” to be personally responsible for your professional debts. Maybe we should look at the other side of the coin, how about the trucking companies that actually did the work, paid their drivers, paid for the equipment and fuel to get the job done and got nothing in return? The ramifications to their families are pretty tremendous as well don't you think? How about someone like Bernie Madoff? Should he be allowed to continue living is his multi-million dollar penthouse and drive one of his fleet of luxury cars and boats? How about his mansion in Florida, or his vacation home in France? Should we feel sorry for him? No I personally feel sorry for his "victims". Well this situation is not so very different, both were “robbing Peter to pay Paul” and eventually that will catch up to you. Can anyone seriously believe that Marvin and his band of cronies had customers with over a million dollars in billing go bankrupt on them? I think not. This is just another case of gross mismanagement that will be paid for by the people who were lied to and taken advantage of.
 
Personal Liability

Yes, I am a broker. And brokers like any other businesses have ones that make money and others that go out of business.

I think here we have to make a distiction between scam artists and failed businesses. They are not one in the same. Yes the consequences of each are fairly similar, but if you're going to talk about "punishing" the debtor, let the punishment fit the crime. A scammer should be put in jail. A person who's business fails shouldn't have every cent his family has taken away. If your trucking company failed and you failed to make payroll, lease payments, etc. and you were incorporated, you could at least protect your family assets.... like most other businesses.

I'm dealing with an issue right now where one of my customers just decided they weren't going to pay. They hired an "accounts payable consulting firm" who offered me 2% as a settlement on $30,000. I paid the carrier every cent, even though there was no money "in trust" for them. As angry as I am about it, it really is my fault for choosing to do business with them. It's also a risk of doing business. We keep a reserve for bad debts and deal with them.

What would happen if a million dollars of receivables ended up as bad debt? We'll most of us would probably end up where Longbow is right now. Granted, some poor decisions get you there but it can happen to you, me or anyone.

What I'm suggesting is that it would be better to post a bond so that money would be available to carriers instead of this trust account monstrosity that no one can really live by anyway.
 
DRC you have your opinion and I have mine, I see it as a scam unintentional but a scam none the less. The business is undercapitalized and when times are good the money is flowing no problem keeping everyone paid. Hey I've got lots of cash let's go on an expensive trip or buy that car we've got lots of cash. Don't try and kid anybody if the bills are not being paid for 45+ days they are selling loads to pay for older loads because they have taken more than the profits out of the business. As soon as times get tough that's when the pyramid/ponzi scheme comes crashing down. Like I said they might be the greatest people in the world but obviously do not know how to run a business. This probably did happen unintentionally but at some point they where selling loads that they knew would never get paid and it got too 1 million dollars. Where did the million dollars go it obviously is not all bad debt from their customers. The scary part of the whole thing is this is just the beginning of the big ones to fall both brokers and carriers, watch your receivables if a company starts to stretch the number of days they pay cut them off or risk getting in too deep with them, harsh reality.
 
Personal Liability

As a freight broker as well, I agree with you Pablo on most things, especially letting the punishment fit the crime. I am absolutely certain that Marv Wilder and his partner are not scam artists, nor are they particularly incompetent. What they have done, and are attempting to do, was more than likely done with the best of intentions. Alas, without bringing up too many old clichés, "The road to hell is paved with good intentions!”

On Jan. 03 2006, I started the year off with notice of one of my long term customer's bankruptcy. First thing I did was to ascertain whether or not the loss would cause me to become insolvent. It did not. I immediately contacted the carriers that did the work for that company and advised them that I would honor their freight invoices, but it may take some time, and begged understanding, and patience. I could not in all consciousness, or nor legally pay these carriers with funds inuring to the benefit of carriers hauling my other customers goods. If I had of done so, I would have been guilty of misappropriation, possibly fraud by favoring some creditors over others, and triggered director’s personal liability, regardless of the fact of having a limited liability company. By isolating the carriers that did the bankrupt customers work from the rest, I avoided putting the other carriers funds at risk, and avoided personal liability, notwithstanding the absence of a trust account. As it turned out, the carriers that I isolated from the rest were paid well within 60 days of invoice date, and work with me today. I went without a paycheck for 3 months. No race cars, cottages or vacations for me in 06 - I had to rebuild cash reserves.

The upshot is that sometimes when trying to do what seems right, we can do wrong, and make a bad situation worse. Like many brokers, I find trying to work with a trust fund way to cumbersome - see my post in Collections - Ontario Load Brokers Certificate. I think this is where we diverge. With my decision not to use a trust account, I knowingly accept the potential personal liability that comes from this practice. And so should everyone else. If this is the case for the directors of Longbow, it was their choice to make. As for their families, with the division of property provisions within the Ontario Family Law Act, only 50% of the couple's (husband's share) assets could be become available to satisfy any judgments if the unsatisfied creditors were to litigate.

As far as posting a bond - most if not all bonding contracts require a personal guarantee for any amounts paid out by the underwriter under the provisions in the bond. With regards to the 2% offer made to you on $30,000., I would accept it only if it was to be part of an orderly windup of that business.
 
Longbow

Did Everyone That They Owe Money To Recieve Paperwork From Their Lawyers?
I Spoke To Jeff A Month Ago And He Said We Should Get It In A Few Days.
Still Have Not Received Anything.
Left 2 Messages On Jeff's Voicemail.
Someone Is Still Answering Phone There As Of Yesterday.
 
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