Hundreds of unpaid motor carriers are named defendants in a suit brought by the bonding company that backed up Convoy, the former digital freight brokerage. It's an effort to figure out who gets paid what out of the $75,000 surety in the aftermath of Convoy's $3.8 billion dollar collapse in October 2023.
The interpleader case, filed in the U.S. District Court for Northern Alabama, lists Swiss Re as the plaintiff and 429 named carriers and factoring companies as defendants. This lawsuit follows an early 2024 interpleader case where Ikea sued Convoy after the shutdown left the furniture giant unsure of who to pay some $519,254.44 among carriers that hauled its freight through Convoy.
In that case, Ikea had a sum of money it owed for shipping and 50 or so carriers clamoring to get paid. In this case, around 400 carriers and a small number of factoring companies who filed claims against the bond all hope for a slice of the $75,000 pie.
Unfortunately, combined claims come to $2,690,074.
"The value of the interpleaded funds is $75,000.00, which Swiss Re [Convoy's bond company] is ready, willing, and able to deposit into the registry of this Court," documents from the court note. "However, several claimants, who have been made defendants in interpleader herein, have made claims against the Bond that currently total $2,690,074."
Swiss Re has already handed over the $75,000 to the court and awaits a resolution.
Several carriers involved in the case said they were owed between $6,000 and "five figures," in the words of one. Many had factored loads with Convoy and then had to pay their recourse factoring company back when it couldn't collect in the wake of the broker's collapse.
One small fleet owner Overdrive spoke to said he hoped carriers would get priority over factoring companies, he saif, some of which surely already got paid.
"The money that was owed to me through Convoy, a majority of it was factored, and since they didn’t pay, we had to repay the factoring company," said the small fleet owner. "Some of those factoring companies maybe already got paid by the carriers, which brings them back down the totem pole."
Split equally among 400 claimants, $75,000 would come out to just $187.50 apiece. None of the truckers Overdrive spoke to said they expected much money from the bonding company. All had moved on hauling with other outfits, and one even said they signed back up to haul for Flexport's new version of the Convoy freight-matching platform.
Flexport bought Convoy's software for about $10 million and now uses the same app interface, but has said it isn't liable for Convoy's debts. That $10 million likely went to Hercules Capital, the venture firm that effectively owned Convoy's accounts receivable after the collapse. Hercules also hasn't proven eager to pay back the carriers shorted by Convoy.
[Related: 'We understand the stress and frustration': Flexport responds to Convoy's unpaid carriers]
After Convoy's bankruptcy, one jilted carrier, Surinder Gill of Gill Freightlines, called for change. Why should a broker once valued at $3.8 billion and with millions and millions of dollars worth of freight moving at any given second only need a surety bond of $75,000?
The small fleet owner Overdrive spoke to involved in the current interpleader case arrived at the same conclusion.
"Anybody can go start a broker company and jump through the loopholes and say, 'I don’t have to pay you guys,'" if their bond runs out, the carrier said. Carriers have to carry $1,000,000 in insurance, but brokers need just a $75,000 bond, he pointed out. "It’s like we’re paying more to make less, and they pay less and make more."
FMCSA is working through implementation of legislation pertaining to brokers' financial responsibilities, including a regulation to require immediate suspension of authority for brokers in event of valid claims. The 2012 legislation that required that rule also raised the bond amount from $10,000 to its current level. The last provisions still awaiting implementing have been delayed a full year until January 2026.
