FreightWaves occasionally posts high-quality content from partner publications in the freight industry. Visit Railway Age for more great content like this.
WilmingtonBiz.com reports that CRRC Yangtze Co. Ltd., owner of 22% of Vertex Railcar, claims nearly all of the $45.4 million in debt listed in the Chapter 7 petition filed in U.S. Bankruptcy Court in Delaware. Two other Chinese companies — Wuhan Kemai Machinery Manufacturing Co. Ltd. and Wuhan Flying Free Logistics Co. Ltd. — list debts of $92,561 and $373,273, respectively.
The involuntary Chapter 7 petition generally is a device for liquidation to pay off debts.
Vertex announced in 2014 it would enter the freight-car business at a former crane manufacturing plant, creating 1,300 jobs — although the WilmingtonBiz report says the company never employed more than 200. It eventually closed in 2018.
CRRC’s move to become part owner of the company drew calls for a congressional investigation in 2016. CRRC and Majestic, a Hong Kong-based private equity firm which took a 45% stake in the company, were eventually cleared to complete the deal following a review by the Committee on Foreign Investment in the United States.
COMMENTARY: Lesson Learned
The lesson for the Railway Age audience is that well-intentioned local job creation excitement, plus a focus on U.S. congressional oversight about China’s entrance into the U.S. freight car building market, was likely misplaced energy.
It appears relatively little was done about fundamental market entry risk analysis. Where was the market entry and sizing due diligence?
Now, investors are looking around for recovery of some kind from someone. Apparently no one was tasked with prudently protecting the investors with a SWOT report as to too many builders.
Who is your economist?
Need more background? Get to the March 2020 Rail Equipment Finance session and network with folks who understand this market.
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now