411–420 of 639 posts
Not sure why this was valued at $3.8B. Wall Street investment bankers smoking crack while evaluating this one.
Creditors are ranked by seniority and get paid out in order by seniority. Equity is below every creditor and has been completely wiped out. Companies are not allowed to take cash or sell the furniture to pay out employees. That money is legally owed to creditors and attempting to stiff them is theft. I'm sorry to those affected at Convoy, but that is the reality of working at a startup that goes through a hasty liquidation. Convoy is not being "cheap" about this, as some are suggesting. Any "retention bonuses" are to keep executives around for long enough to unwind the company in an orderly fashion. Nobody is getting rich off failure; if everyone were to walk away there'd be nothing left and therefore nothing to recover and distribute. It's bad for everyone, but the alternative is worse.
As for the larger situation: Convoy were a digital freight brokerage. They acted as intermediaries between shippers and carriers and make money on the spread between the two. They got into trouble because the entire freight sector has been suffering a double whammy of cost increases due to inflation (ie. diesel costs) and a slowdown in demand. This has caused a number of carriers and brokerages to go bust. Freight brokerage has some other properties that make Convoy's situation particularly serious. In particular, carriers typically securitize their accounts receivable. In freight, this is known as "factoring." Convoy got stuck holding the bag after their partner carriers went under, having already paid them for their service, but still waiting for payment from the shipper.
Worst of all, Convoy had no exits because their only potential acquirers are in the same industry and are also getting completely crushed.
(Ex-)Convoy engineer here. No mystery as to why this happened, sudden tight market and low available capital demolished us. External reasons given in the article were the same we knew and couldn't do anything about considering that none of the M&A options materialized. Detailed the shutdown on a call at 8:30am Pacific this morning. CEO said there'll be no severance or healthcare. Lot of talented folks in Seattle and…
>CEO said there'll be no severance or healthcare. Classy. Learning a lot about how certain people treat their employees during these last couple of admittedly insane years. Good for future reference, I guess - though not much solace now. I feel for the employees. Edit: Wow, more responses than I thought! I admit that the tone of my comment was too reactionary, but my opinion stands. I won't modify the original commen…
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Yes, OP is either from Europe or very entitled or both.
When did not wanting to be shafted become entitlement?
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Yes, OP is either from Europe or very entitled or both.
When you get on a plane do you think they fuel it to run out exactly at the moment the plane stops at its final destination, and not a drop more? Don't you think that they reserve fuel for emergencies? Why shouldn't a business consider itself at 0 operating dollars but still have a full account for healthcare or equivalent severance?
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Company shutdown != layoff.
Yes it does though? The legal entity of the company still exists, it’s just no longer conducting business or paying employees. Thats a mass layoff. The California version of the WARN Act explicitly covers terminating business operations.
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> two ex-Convoy employees have posted in this thread saying they are "extremely unsurprised" that this happened, and could see it coming They were laying people off every few months for over a year. There is a difference, however, between a material chance of default and being completely fucked. > it would have been irresponsible for Convoy to do anything but run it it zero!" They should have put severance terms into…
> Providing employees with de novo severance after you know it's going under guarantees creditor lawsuits. Citation needed. Providing executive suite with bonuses and parachutes does. Indeed, even law firms talk about this: > Severance payments to “insiders” (generally defined under the Bankruptcy Code as officers, directors, persons in control of the business, and relatives of such individual(s)) could be subject to…
TL; DR The moment you find the business insolvent, it belongs to your creditors. Many commenters are treating Convoy like a run-of-the-mill equity-funded start-up.
> No mention is made of creditors issuing lawsuits against rank and file employees
Most likely, the creditors would file an injunction and put the company into bankruptcy on the basis of management having essentially said that it’s insolvent.
> even for severance payments that were never in employment contracts, courts place them at/near the front of the line in bankruptcy proceedings
Closer to the middle [3]. With Toys ‘R’ Us, the creditors voluntarily provided the severance [4]. No court forced it. And it wasn’t provided by management or shareholders.
[1] https://www.americanbar.org/groups/litigation/resources/news...
[2] https://www.jonesday.com/en/insights/2010/09/fifth-circuit-a...
[3] https://sgp.fas.org/crs/misc/LSB10288.pdf
[4] https://www.vox.com/the-goods/2018/11/21/18106545/toys-r-us-...
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Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.
> if a company is shutting down, it obviously can't provide severance Not really true. The company is owned by its shareholders, and they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance, or they may divide the funds among themselves. If there are no funds, they can choose to invest more to pay severance. Obviously they're unlikely to want to do that, but it's n…
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Cobra is such a huge slap in the face too for most people. We know you just lost your income as of today, but do you wanna buy this health insurance plan for 3K a month?
Oh, you forgot the potential 2% fee, too. If your employer was paying $3,000/mo for your insurance, it's going to be $3,060 for you. Fuck whichever lobbyists made sure that was allowable. Edit: corrected per the reply.
It's not mandatory and its capped at 2%, not 5%, but, yes, there is a potential additional charge beyond just the full cost (what would be the employer + employee share, for a current employee) of coverage.