Trucking startup Convoy closes operations with no buyer • Hacker News Board

Re: Trucking startup Convoy closes operations with no buyer

#581

Post by chadash » Fri, Oct 20, 2023, 1:25 PM UTC

twic wrote: post #574

HWR_14 wrote: post #496

Earlier quoted context omitted.

While in general what you are saying is true, employees owed wages are the highest seniority of creditor. As long as you were selling furniture for reasonable prices to make payroll, you should be fine.

In case anyone is interested in the gory details, the priority order of creditors is here: https://usbankruptcycode.org/chapter-5-creditors-the-debtor-... Wages are fourth priority, but only up to $12,850 per person (one month's salary at ~150k a year). The three priorities above wages are child support (not really applicable to corporate bankruptcy i assume), liquidator's expenses, and some mildly complex case i don…

thanks! this is great reporting.

I think that this list might be talking about unsecured claims though. I think that secured claims might be separate. So, for example, if an individual declares bankruptcy and they owe $500k on their house, that claim would come before child support payments. I am definitely not a lawyer and bankruptcy law strikes me as particularly complex.

The third priority is tough to parse. From looking over it quickly, it seems like this might be claims from doing business between when i file bankruptcy and when i go into foreclosure. Again, not a lawyer, but my guess here is that if I'm a store and I file bankruptcy on Monday, but don't have a trustee until Wednesday, and I put in an order for a palette of water bottles on Tuesday, then the distributor of the water bottles might have a priority claim.

Re: Trucking startup Convoy closes operations with no buyer

#582

Post by s1artibartfast » Fri, Oct 20, 2023, 1:28 PM UTC

thereisnospork wrote: post #533

s1artibartfast wrote: post #514

Earlier quoted context omitted.

This however is not a bankruptcy case, but a wage theft case. Going through a perfectly legal bankruptcy procedure is very different than working your severs 72 hours a week for years without overtime then refusing to show up at court. This comports with my understanding that piercing the veil usually requires illegal behavior.

I don't understand your point? It is a simple concept that wage liabilities, eg a last check that bounces, or 'wage theft'[0], can result in those liabilities passing through to become personal liabilities of the company's owner(s). Again IANAL, and ymmv based on specific circumstances, but piercing for unpaid wages is very much a thing in (at least) California law. [0]an obviously illegal activity?

I understand what you said, I just don't think it is true and none of the provided sources say so. Meanwhile, everything I have read says they are simply priority creditors up to a limit. Beyond the limit, judges will pay other creditors before employees.

>Because claims for unpaid wages due to insolvency do not fall under the Fair Labor Standards Act (FLSA) unless the employer willfully failed to pay wages owed and filed for bankruptcy as an attempt to avoid paying wages, the U.S. Department of Labor has no jurisdiction in this area and will not accept claims.

https://www.shrm.org/resourcesandtools/tools-and-samples/hr-...

Re: Trucking startup Convoy closes operations with no buyer

#583

Post by ilamont » Fri, Oct 20, 2023, 2:03 PM UTC

trucking wrote: post #538

Are they not going to pay us? We hauled the load from convoy but didn’t get the payment that was supposed to released yesterday. I tried calling them but nobody answered.we are just a small company and we are not getting paid for the we have done. Diesel is so expensive. Do I have pay expense out of my pocket?

You should check the bankruptcy documentation and register as a creditor. Sorry to hear this, too … what was your experience working with Convoy?

Re: Trucking startup Convoy closes operations with no buyer

#584

Post by BeFlatXIII » Fri, Oct 20, 2023, 2:50 PM UTC

mobilefriendly wrote: post #556

dudul wrote: post #275

Earlier quoted context omitted.

A better fix would be for people to see their health insurance divorced from their employer. That would actually greatly benefit startups and be one step back from corporate serfdom.

U.S. tax law needs to change for this to happen. Individual health care should be totally tax deductible (the way it is for businesses) or should not be tax deductible at all for business (a small step in this direction by the Obama Administration was vilified as a "Cadillac Tax"

If proper single payer is out of the question, the biggest mistake in Obamacare is that employer-sponsored health plans remained legal. Everyone should have been forced into the same market.

Re: Trucking startup Convoy closes operations with no buyer

#585

Post by rchaud » Fri, Oct 20, 2023, 3:18 PM UTC

ska wrote: post #139

adastra22 wrote: post #107

Earlier quoted context omitted.

Not when a company shuts down like this. If they did, the investors would claw it all back through the courts. The founders and executives walk away from this with $0.

> The founders and executives walk away from this with $0. Often after having forgone salary for a while, also.

How many people are leading a 1500-headcount company on a zero salary? Even Steve Jobs couldn't do it without backdating options to make himself Rockefeller while acting like Gandhi.

Re: Trucking startup Convoy closes operations with no buyer

#586

Post by jessriedel » Fri, Oct 20, 2023, 3:25 PM UTC

s1artibartfast wrote: post #504

jessriedel wrote: post #497

Earlier quoted context omitted.

Courts can pierce the corporate veil for failure to pay employees.

Source? normally piercing the corporate veil requires serious executive misconduct.

This seems to establish precedent that unpaid wages by a bankrupt company, even in the absence of serious misconduct, are sufficient justification for veil piercing:

> The case therefore would up presenting a clear question of law: Where the workers are employed by a corporation, can an individual be held liable for penalties associated with statutory violations in the payment of wages where there was no allegation or finding that the corporate laws had been misused or abused for a wrongful or inequitable purpose? In other words, do sections 558 and 1197.1 allow workers to recover civil penalties for nonpayment of wages from individuals even when there are no other grounds for piercing the corporate veil under the doctrine of alter ego?

> The court of appeal concluded that under the clear language of sections 558 and 1197.1, the State of California, through the Labor and Workforce Development Agency (“LWDA”), can recover penalties associated with unpaid wages from individuals. Furthermore, PAGA allows employees to stand in the shoes of the LWDA and recover those penalties. Accordingly, employees are also permitted to recover those penalties from individuals.

https://hunterpylelaw.com/2021/02/individual-liability-for-w...

Re: Trucking startup Convoy closes operations with no buyer

#587

Post by seattle_spring » Fri, Oct 20, 2023, 3:35 PM UTC

benced wrote: post #72

vogt wrote: post #55

Earlier quoted context omitted.

>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…

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.

That completely depends on if the founders or investors are walking away with anything.

Re: Trucking startup Convoy closes operations with no buyer

#588

Post by HDThoreaun » Fri, Oct 20, 2023, 3:39 PM UTC

zo1 wrote: post #572

FireBeyond wrote: post #378

Earlier quoted context omitted.

The CEO who was the founder and until he came back as CEO was on the BOD, the executive, in fact. "No idea at all!"

I've worked at 1k employee-sized companies. The CEOs definitely know what's happening, who shits on who, who's hired/fired, what each project is going through at a glance, etc. So I would attribute this 100% to either lying, incompetence and/or "faking" by trying to emulate a Steve Jobs/CEO persona.

The founder left the company and brought in a new CEO from amazon. He was still on the board. Then he saw they were hiring and complained on twitter, presumably fired the new ceo and came back to rescind the offers. I think it's believable that he was chilling on the beach or something until he saw the hiring news.

Re: Trucking startup Convoy closes operations with no buyer

#589

Post by FireBeyond » Fri, Oct 20, 2023, 4:32 PM UTC

Dylan16807 wrote: post #503

FireBeyond wrote: post #383

Earlier quoted context omitted.

Oh, let's not pat Fred Smith on the back for his grit and determination here. FedEx was already shafting their pilots for months before this. Bounced paychecks, pilots paying for jet fuel on personal credit cards, and more. If I was a pilot there, I'd have said "Fuck you, Fred", even though he won. How sociopathic do you have to be to gamble company money (sorry, isn't that a felony?) while bouncing paychecks? And ye…

> FedEx was already shafting their pilots for months before this. Bounced paychecks, pilots paying for jet fuel on personal credit cards, and more. This is bad. > How sociopathic do you have to be to gamble company money (sorry, isn't that a felony?) while bouncing paychecks? It sounds like he was about to bounce a lot more paychecks. Going all or nothing instead isn't something I would call sociopathic. What makes y…

> Normally "gambling company money" implies embezzlement, which is not what happened here.

Huh, what?

"In one instance, after a crucial business loan was denied, he took the company's last $5,000 to Las Vegas and won $27,000 gambling on blackjack to cover the company's $24,000 fuel bill."

"Embezzlement is the fraudulent taking of property by someone to whom it was entrusted, usually involving theft from a business or employer."

I mean I suppose you could try to make some argument that it was an officially sanctioned company act, but that's definitely some post facto rationalization.

"’The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000-- how could you do that?’ He shrugged his shoulders"

Sounds both unsanctioned and sociopathic to me.

And not Fred's first or last brush with financial malfeasance, indicted for forgery over a $2 million loan from his family's trust fund.

I'm inclined to think 'selfish' much more than 'plucky startup founder'.

Re: Trucking startup Convoy closes operations with no buyer

#590

Post by fairity » Fri, Oct 20, 2023, 4:33 PM UTC

moneywoes wrote: post #125

fairity wrote: post #23

And so it begins. A large wave of unprofitable startups that raised in 2021/2022 are going to fail at becoming profitable and be forced into fire sales or bankruptcy over the next 12 months. The capital constriction really started in Q3 2022. Here's a graph: https://techcrunch.com/wp-content/uploads/2023/03/Screenshot... If I had to guess, bankruptcies like this peak sometime next year since many of these companies w…

What's the opportunity here, bigger companies consolidate markets?

I think behind most big failures (at least the ones where meaningful revenue was generated) is a healthy, sustainable business idea.

Oftentimes, the founders just grew too fast or flew too close to the sun.

So, there’s an opportunity to pick up the pieces and rebuild, or start from scratch with the learnings.

In most cases, the firm handling liquidation auctions off the firm’s assets, so if you have the motivation to pick up the pieces and grind out a sustainable business, you can usually purchase the tech and customer lists for six or low seven figures (varies based on size of business of course). If you actually pursue this, my advice is to make your offer as simple as possible (don’t ask for a bunch of diligence) and set an expiration on your offer so they don’t shop around. The liquidators are often not incentivized to maximize value - they just want to finish the project as painlessly as possible.