Balkan Express Bankruptcy: What It Means for Texas Trucking Companies and Creditors

When a Trucking Company Files for Bankruptcy After a Lawsuit — What Happens Next?

Two months ago, a major Texas trucking company made headlines when it filed for Chapter 11 bankruptcy protection. The filing came just weeks after one of its creditors sued the company for allegedly failing to repay $4.2 million in loans, interest, and legal fees.

Balkan Express and its sister company Balkan Logistics, both based in Fort Worth, operate a fleet of approximately 170 trucks and employ 166 drivers. The companies ship freight across 48 states, serving as a critical link in America’s supply chain.

Now, with more than $22 million in debt, Balkan Express is attempting to reorganize while continuing operations. But what does this mean for the company’s drivers, creditors, and the broader Texas trucking industry?

At Attorney911, we’ve seen this scenario play out before. When trucking companies face financial distress, the ripple effects can be devastating — not just for the business, but for the families who depend on it. If you’re a creditor, driver, or business partner caught in this situation, you need to understand your rights and options.

Here’s what you should know about the Balkan Express bankruptcy, how it compares to other recent trucking industry collapses, and what steps you can take to protect yourself.

Why Trucking Companies File for Bankruptcy

Trucking companies operate on razor-thin margins in an industry plagued by volatility. When financial pressures mount, bankruptcy often becomes the only option. Here are the most common reasons trucking companies file for Chapter 11:

1. Cash Flow Problems

Trucking is a capital-intensive business. Companies must cover:
– Fuel costs (often fluctuating wildly)
– Driver salaries and benefits
– Truck payments and leasing costs
– Maintenance and repairs
– Insurance premiums
– Regulatory compliance costs

When revenue slows — due to economic downturns, reduced shipping demand, or increased competition — cash flow can dry up quickly. Balkan Express cited “cash flow issues” as the primary reason for its bankruptcy, a common refrain in the industry.

2. Debt Burdens

Many trucking companies take on significant debt to:
– Purchase or lease trucks and trailers
– Expand their fleet
– Cover operating expenses during slow periods

When debt becomes unmanageable, companies may default on loans, leading to lawsuits from creditors — exactly what happened with Balkan Express and M&T Capital.

3. Lawsuits and Legal Liabilities

Trucking companies face lawsuits from multiple fronts:
– Creditors (like M&T Capital) suing for unpaid debts
– Accident victims seeking compensation for injuries or wrongful death
– Regulatory agencies imposing fines for safety violations
– Employees filing wage or discrimination claims

A single large lawsuit can push a struggling company into bankruptcy. In Balkan Express’s case, the $4.2 million lawsuit appears to have been the tipping point.

4. Regulatory Compliance Costs

The trucking industry is heavily regulated by the Federal Motor Carrier Safety Administration (FMCSA). Compliance requires significant investment in:
– Driver training and qualification (49 CFR Part 391)
– Hours of service (HOS) monitoring (49 CFR Part 395)
– Vehicle maintenance and inspections (49 CFR Part 396)
– Electronic logging devices (ELDs)
– Drug and alcohol testing programs

Non-compliance can result in fines, out-of-service orders, and lawsuits — all of which drain resources. If a company falls behind on compliance, it can spiral into financial distress.

5. Economic Downturns and Reduced Demand

The trucking industry is highly sensitive to economic cycles. When the economy slows:
– Manufacturing output decreases
– Retailers order less inventory
– Shipping volumes decline

This reduces demand for trucking services, squeezing revenue. The COVID-19 pandemic and subsequent supply chain disruptions demonstrated how quickly the industry can be upended.

6. Rising Operational Costs

Recent years have seen dramatic increases in:
– Fuel prices (a major expense for trucking companies)
– Insurance premiums (especially for companies with poor safety records)
– Equipment costs (new trucks and trailers are expensive)
– Driver wages (competition for drivers has driven up pay)

When costs rise faster than revenue, profitability evaporates.

7. Competition from Larger Carriers

The trucking industry is dominated by a few large players (e.g., J.B. Hunt, Schneider, Werner, Swift) that can undercut smaller carriers on price. Smaller companies like Balkan Express often struggle to compete, leading to financial strain.

What Happens in a Chapter 11 Bankruptcy?

Chapter 11 bankruptcy allows a company to reorganize its debts while continuing operations. Here’s how the process typically works:

1. Filing the Petition

The company files a petition with the bankruptcy court, listing its assets, liabilities, and creditors. Balkan Express filed in the Northern District of Texas, which will oversee the case.

2. Automatic Stay

Once the petition is filed, an automatic stay goes into effect. This halts:
– Lawsuits against the company
– Collection actions by creditors
– Foreclosures or repossessions

For Balkan Express, this means M&T Capital’s lawsuit is paused while the bankruptcy proceeds.

3. Debtor-in-Possession (DIP) Financing

To continue operating, the company may seek DIP financing — loans that take priority over existing debts. These funds allow the company to pay employees, fuel costs, and other essential expenses.

4. Reorganization Plan

The company must propose a reorganization plan outlining how it will repay creditors over time. This plan must be approved by the bankruptcy court and a majority of creditors.

5. Creditor Committees

A committee of the company’s largest unsecured creditors is formed to negotiate the reorganization plan. In Balkan Express’s case, this committee will likely include M&T Capital and other major creditors.

6. Plan Confirmation

If the court approves the reorganization plan, the company emerges from bankruptcy and continues operations under the new terms. If the plan is rejected, the company may be forced into Chapter 7 liquidation.

7. Emerging from Bankruptcy

If successful, the company exits bankruptcy with reduced debt and a fresh start. However, many companies struggle to regain profitability and may file for bankruptcy again in the future.

Legal Rights for Those Affected by the Balkan Express Bankruptcy

If you’re impacted by the Balkan Express bankruptcy, you have legal rights. Here’s what you should know:

1. Drivers and Employees

• Wage Claims: If Balkan Express fails to pay wages, drivers can file a claim with the U.S. Department of Labor or pursue legal action.
• Unemployment Benefits: Laid-off drivers may qualify for unemployment insurance.
• Severance Pay: If the company promised severance in employment contracts, drivers may be entitled to those payments.
• Union Protections: Unionized drivers should consult their union representatives for guidance.

2. Creditors

• Proof of Claim: Creditors must file a proof of claim with the bankruptcy court to seek repayment.
• Secured vs. Unsecured Claims: Secured creditors (e.g., banks with liens on trucks) have priority over unsecured creditors (e.g., vendors, unsecured lenders).
• Preference Actions: The bankruptcy trustee may claw back payments made to creditors shortly before the bankruptcy filing.
• Fraudulent Transfers: If Balkan Express transferred assets to avoid creditors, those transfers may be reversed.

3. Customers and Shippers

• Cargo Claims: If cargo is lost or damaged, customers may file a claim against Balkan Express’s insurance.
• Contract Protections: Review contracts for force majeure clauses or bankruptcy protections.
• Alternative Carriers: Customers should identify alternative carriers to avoid disruptions.

4. Vendors and Suppliers

• Stop Shipments: Vendors may halt further shipments until payment is secured.
• File a Proof of Claim: Vendors should file a claim in the bankruptcy case.
• Review Contracts: Check for clauses that allow termination in the event of bankruptcy.

5. Landlords and Lessors

• File a Proof of Claim: Landlords should file a claim for unpaid rent or lease payments.
• Terminate Leases: Landlords may terminate leases if Balkan Express fails to pay rent.
• Consult an Attorney: Work with an attorney to protect your rights.

What’s Next for Balkan Express?

Balkan Express has stated that it expects to emerge from bankruptcy in three to six months. However, the outcome is far from certain. Here’s what could happen next:

1. Successful Reorganization

If Balkan Express can negotiate a favorable reorganization plan with its creditors, it may emerge from bankruptcy with reduced debt and a fresh start. This would allow the company to continue operations and retain its drivers.

Challenges:
– Creditors may demand significant concessions.
– The company must demonstrate a viable path to profitability.
– Market conditions may not improve in time.

2. Conversion to Chapter 7 Liquidation

If Balkan Express cannot secure DIP financing or negotiate a reorganization plan, the bankruptcy court may convert the case to Chapter 7. This would result in:
– Liquidation of Assets: The company’s trucks, property, and other assets would be sold to repay creditors.
– Layoffs: All employees, including drivers, would lose their jobs.
– Cease of Operations: The company would shut down permanently.

Challenges:
– Liquidation often results in pennies on the dollar for creditors.
– Drivers would face sudden unemployment.

3. Acquisition by Another Carrier

Another trucking company may acquire Balkan Express’s assets, including its trucks and customer contracts. This could allow the company to continue operating under new ownership.

Challenges:
– Acquirers may demand steep discounts on assets.
– Drivers may face layoffs if the acquiring company consolidates operations.

4. Prolonged Bankruptcy Proceedings

Bankruptcy cases can drag on for years, especially if creditors and the company cannot agree on a reorganization plan. Prolonged proceedings can:
– Drain Resources: Legal and administrative costs can deplete the company’s remaining funds.
– Erode Customer Confidence: Customers may switch to more stable carriers.
– Demoralize Employees: Drivers may seek employment elsewhere.

What Should You Do If You’re Affected by the Balkan Express Bankruptcy?

If you’re a driver, creditor, customer, or vendor impacted by the Balkan Express bankruptcy, here’s what you should do:

1. Drivers and Employees

• Document Everything: Keep records of your employment, wages, and benefits.
• File for Unemployment: If you lose your job, apply for unemployment benefits immediately.
• Explore Job Opportunities: Begin searching for other trucking jobs.
• Consult an Attorney: If you’re owed wages or benefits, an attorney can help you pursue legal action.

2. Creditors

• File a Proof of Claim: Submit a claim to the bankruptcy court to seek repayment.
• Monitor the Case: Stay informed about the company’s financial status and reorganization plan.
• Consult a Bankruptcy Attorney: An attorney can help you navigate the bankruptcy process and protect your interests.

3. Customers and Shippers

• Identify Alternative Carriers: Diversify your shipping partners to avoid disruptions.
• Review Contracts: Check for force majeure clauses or bankruptcy protections.
• Monitor Shipments: Ensure that payments to Balkan Express are properly applied.

4. Vendors and Suppliers

• File a Proof of Claim: Submit a claim to the bankruptcy court.
• Stop Shipments: Halt further shipments until payment is secured.
• Review Contracts: Check for clauses that allow termination in the event of bankruptcy.

5. Landlords and Lessors

• File a Proof of Claim: Submit a claim for unpaid rent or lease payments.
• Terminate Leases: If Balkan Express fails to pay rent, consider terminating the lease.
• Consult an Attorney: Work with an attorney to protect your rights.

The Bigger Picture: What This Means for Texas Trucking

The Balkan Express bankruptcy is a stark reminder of the financial pressures facing the Texas trucking industry. Texas is a critical hub for freight movement, with major corridors like I-10, I-35, and I-45 carrying billions of dollars in goods each year. When companies like Balkan Express fail, the entire supply chain feels the impact.

1. The Driver Shortage Will Worsen

Texas already faces a shortage of qualified truck drivers. When companies go bankrupt, drivers often leave the industry, exacerbating the shortage. This can lead to:
– Higher Shipping Costs: With fewer drivers available, carriers may raise rates.
– Delayed Deliveries: Businesses may struggle to find trucks to move their freight.
– Increased Competition for Drivers: Surviving carriers may poach drivers from struggling companies.

2. Capacity Constraints Will Drive Up Costs

Fewer trucks on the road mean less capacity to move freight. This can lead to:
– Higher Shipping Rates: Businesses may pay more to secure trucking services.
– Longer Transit Times: With fewer trucks available, deliveries may take longer.
– Increased Reliance on Rail: Some shippers may switch to rail, which is slower but more stable.

3. Regulatory Scrutiny Will Increase

The FMCSA and other agencies may increase scrutiny of trucking companies to prevent bankruptcies and ensure safety. This could lead to:
– More Frequent Inspections: Companies may face more roadside inspections.
– Stricter Enforcement: Violations may result in higher fines or out-of-service orders.
– Increased Reporting Requirements: Companies may need to provide more data to regulators.

4. Consolidation Will Continue

The trucking industry is consolidating, with larger carriers acquiring smaller ones. This trend is likely to continue, leading to:
– Fewer Small Carriers: Small companies may struggle to compete with larger carriers.
– More Vertical Integration: Large retailers (e.g., Amazon, Walmart) may expand their own trucking fleets.
– Increased Market Power for Large Carriers: A few dominant players may control pricing and capacity.

Final Thoughts: Protecting Yourself in an Uncertain Industry

The Balkan Express bankruptcy is a wake-up call for the Texas trucking industry. Whether you’re a driver, creditor, customer, or carrier, the financial health of trucking companies directly impacts your livelihood.

At Attorney911, we’ve seen firsthand how bankruptcies like this can devastate families and businesses. That’s why we’re committed to helping our clients navigate these challenges with confidence.

If you’re affected by the Balkan Express bankruptcy — or if you’re a trucking company facing financial distress — don’t wait until it’s too late. Call us today at 1-888-ATTY-911 for a free consultation. Our team, led by Ralph Manginello, has the experience and expertise to guide you through this difficult time.

Here’s what you can do right now:

1. If you’re a creditor: File a proof of claim and consult an attorney to protect your interests.
2. If you’re a driver: Document your employment and explore other job opportunities.
3. If you’re a customer: Diversify your carriers and review your contracts.
4. If you’re a vendor: Stop shipments until payment is secured and file a proof of claim.
5. If you’re a landlord: Consult an attorney to terminate leases if necessary.

The trucking industry is tough, but you don’t have to face these challenges alone. Call Attorney911 at 1-888-ATTY-911 or visit https://attorney911.com to schedule your free consultation today.

This article is for informational purposes only and does not constitute legal advice. Every situation is unique, and you should consult an attorney for advice tailored to your specific circumstances.