A B.C. group of trucking companies has been granted creditor protection under the Companies’ Creditors Arrangement Act as it looks to restructure its operations and secure new financing.
VK Delivery and Moving Services, Product Line Holdings and Logistics, VK 24/7 Logistics Solutions and VK Linehaul are impacted. The companies are owned by Ved Kaler, who moved from India to the Lower Mainland of B.C. in 1989.
He formed VK Delivery in 1998 with a single truck, growing the business and eventually adding VK Linehaul as local customers began requesting longhaul service, according to an affidavit.
The company grew its operations and expanded into Alberta, Ontario and the U.S., adding warehousing services. Currently, the companies employ 113 people, 71 located in B.C., in addition to 80 owner-operators.
The companies had gross revenues of $44.5 million in 2022 and $41.8 million in 2023, but began experiencing cash flow issues in 2024.
“The source of this problem was initially unclear to me as our revenues remained fairly strong,” Kaler said in his affidavit. “Then I gradually formed a belief that there were multiple causes and we examined several issues within our business.”
Kaler said a manager within the company was authorizing “significant overpayments” to trucking contractors over a period of 18-24 months. He estimates the overpayments amounted to $1.5 to $2 million.
Kaler said one contractor was overpaid by about $274,219 during a 12-month period, with those payments approved by the former manager.
“We believe similar overpayments were made to at least five or six additional contractors,” Kaler said. “
A police report was filed, and when confronted with the accusations, Kaler said the manager quit on the spot and didn’t respond to questions. This came after VK ramped up its staffing and warehouse space in response to high demand following the Covid-19 pandemic, adding to its staffing costs.
Cash flow challenges caused the company to fall behind on its insurance payments, which was in arears by about $800,000-$850,000. It also owes about $3.9 million to Canada Revenue Agency and RBC says it’s owed $6.5 million.
The companies collectively have assets of $29.8 million and liabilities of $26.3 million. It’s in discussions with another lender, which subject to due diligence completion, would lend the company US$6.5 million.
Crowe MacKay & Company has been appointed monitor during the proceedings.
