Kal Freight Adds Directors After Being Accused of Malfeasance
Texas-Based Trucking Company Filed Chapter 11 Recently With Nearly $325 Million in Long-Term Debt
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A judge approved adding independent directors to Kal Freight鈥檚 board and other corporate governance changes after the bankrupt trucking firm was accused of double-pledging its trucks as collateral to obtain financing from U.S. and Canadian lenders.
Judge Christopher Lopez said Dec. 11 that he鈥檇 approve appointing Robert H. Warshauer and John Young Jr. as directors as well as other measures meant to limit the influence of the trucking company鈥檚 owner, Kalvinder Singh. The request was granted days after Kal Freight filed Chapter 11 with nearly $325 million in long-term debt.
Kal Freight鈥檚 lenders and former business partners have accused the firm of malfeasance. In a California lawsuit earlier this year, two former business partners claimed Kal Freight duplicated vehicle identification numbers on trucks and trailers that had already been used as collateral on loans to secure additional financing.
Vehicle finance lender Daimler Truck Financial Services USA claimed California-based Kal Freight 鈥減erpetrated a massive fraud鈥 on creditors, according to court papers. The lender has alleged Kal Freight transferred trucks and trailers included in Daimler鈥檚 collateral and sold those units to third parties, free and clear of its liens.
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Kal Freight Chief Restructuring Officer Bradley Sharp, who was engaged by the company in September, testified Dec. 11 that Singh didn鈥檛 oppose adding the directors or restrictions on his ability to remove them from the board.
Singh couldn鈥檛 be reached Dec. 11 and didn鈥檛 appear at the hearing or respond in court to the requests approved by Lopez. Attorneys representing Singh in a wrongful termination suit filed in June against Kal Freight did not respond to requests for comment.
In an earlier court filing, Sharp said Kal Freight has been subject to various allegations of inappropriate accounting practices and claims that personnel improperly moved trucks and trailers from the U.S. to Canada and improperly titled its vehicles. The company has said it intends to use Chapter 11 鈥渢o transparently restructure鈥 Kal Freight and wind down some of its businesses, according to court documents.
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