Former Celadon affiliate 19th Capital sold in deal that should save dozens of jobs

Two out-of-state financial services firms have acquired the assets of former Celadon Group Inc. affiliate 19th Capital Group in a deal that will allow the Indianapolis-based company to continue operating with a reduced workforce rather than shutting down as previously planned.

19th Capital is an asset financing and fleet management company that owns and manages Quality Co., a former subsidiary of now-defunct Celadon.

Hilco Global, based in the Chicago suburb of Northbrook, Illinois, announced Tuesday that it, along with New York City-based Colbeck Capital Management, acquired 19th Capital’s assets from Toronto, Canada-based element Fleet Management in a “multi-million-dollar transaction” that closed May 1.

The exact purchase price was not disclosed, but in a financial filing Monday, Element said it expected to take an after-tax loss of about $15 million on the sale of 19th Capital’s $122 million in assets and the settlement at a discount of 19th Capital’s $99 million in third-party debt.

The acquisition included thousands of trucks and semi-trailers; 19th Capital’s intellectual property; its trucking service and support machinery and equipment; and a “substantial portfolio of accounts receivable,” which includes more than 600 existing truck leases.

The new owners will also assume the lease for 19th Capital’s two truck yards and its 136,000-square-foot facility at 9702 E. 30th St., between Post and Mitthoeffer roads.

Hilco said in a written statement that it plans to “continue to operate the transportation and truck leasing company, and will continue selling and servicing trucks and managing the current lease portfolio while restructuring the operation to be more efficient as a going concern.” In doing so, the company said it “would save at least 55 jobs that otherwise would have been eliminated by the end of the year.”

Element had been planning to close 19th Capital because of disappointing performance before Hilco and Colbeck stepped up as buyers.

In February, 19th Capital notified the Indiana Department of Workforce Development that the company would begin to wind down its operations on or after March 27, eliminating 199 jobs.

Hilco said it will use executives from its various divisions to run 19th Capital. Steve Tanzi, the president of Hilco Performance Solutions, will serve as 19th Capital’s new CEO. Bryan Courcier, senior vice president of Hilco Valuation Services, will serve as chief operating officer. Buddy Beaman, executive vice president at Hilco Receivables, will be the chief commercial officer.

Although 19th Capital was not affiliated with Celadon when the trucking company filed for bankruptcy and ceased operations in December, the two entities had previously been entangled in a significant way.

In 2015, Celadon sold a portfolio of semis and leases to 19th Capital Group LLC, which at the time was a joint venture in which Wayne, Pennsylvania-based equity firm Larsen MacColl Partners held a majority interest. Celadon and its executives held a minority-ownership stake.

In December 2016, Celadon terminated that joint venture and formed a new joint venture with Toronto, Canada-based Element Fleet Management.

Celadon’s auditor raised questions about the transactions in May 2017, setting off a cascade of actions that led to a criminal investigation of Celadon and charges filed against several executives.

Element purchased 100% of the ownership in 19th Capital in October 2018. It had originally planned to run off 19th Capital’s assets over a 36-month period, but it accelerated those plans because of deteriorating conditions in the truck market.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}