TORONTO, Ont. – Three carriers forced by court order in March to continue providing services to Ivaco, a Quebec-based steel producer, are planning to fight back.
In mid-March, a group of carriers withdrew trucking services from the steel producer, which is presently under creditor protection, because it owes the carriers for transportation services provided prior to the date upon which the court granted protection under the Companies’ Creditors Arrangement Act (CCAA) to the company (Sept. 16, 2003).
Within days the company went to court seeking an order to force three carriers to resume service. Justice James Farley of the Ontario Superior Court ruled in favour of Ivaco. (Justice Farley is also presiding over the Stelco and Air Canada re-organizations.)
The three companies targeted by the court order were not under any formal agreement or even commitment to provide services to the Ivaco group, said Ontario Trucking Association officials.
The carriers are receiving widespread support from the trucking industry, OTA officials said, and are now looking at resolving this issue through all legal channels available to them and have instructed counsel to determine the most appropriate course of action.
Said OTA president, David Bradley: “Most carriers realize it could be them next time and they appreciate the risk the carriers have taken under very trying circumstances.”
The service withdrawal is the first such action of its kind that anyone can recall in the trucking industry, but according to Bradley, it was a long time coming and may not be the last.
“The trucking industry has been taking it in the teeth for so long because shippers have been able to play one carrier off against another by relying on the threat of shifting the business to another carrier if the trucking company currently providing the service tried to kick up a stink,” said Bradley. “But, there is no excess capacity in the trucking industry now, so I would doubt that it will be easy to find someone else to haul the freight. More and more big companies are resorting to protection under the Companies Creditors Arrangement Act, so that it appears to have almost become a way of doing business. The secured creditors will at least get some of the monies that are owed to them, but the trucking companies will likely get nothing in the end, except the hope that they might have the privilege of serving the company when and if it emerges from protection or is sold.
“In the meantime, they are expected to continue to haul freight for the company. Their balance sheets have been greatly impacted and in many cases their own creditors are breathing down their necks. They believe it’s not fair and they are fighting back.”
As of printing, the three carriers were complying with the court order and had resumed service to Ivaco in good faith.