OTA to proceed with TCT Logistics case

TORONTO (April 9, 2002) — A lawyer for the Ontario Trucking Association plans to proceed with a legal challenge as to whether to a little-enforced provincial regulation governing load brokerage operations should apply to the bankruptcy of TCT Logistics.

Ontario Superior Court is scheduled to hear a motion April 18 to decide whether KPMG, the trustee in the bankruptcy of the Calgary-based trucking and logistics company, can release funds set aside for Ontario carriers who provided transportation for TCT Logistics in order to pay secured creditors. Dozens of carriers in Ontario became unsecured creditors when the business entered receivership on Jan. 24.

Last week, the OTA offered to co-ordinate a legal challenge for carriers left unpaid by the company. John Douma, a lawyer representing the association, projects legal costs for the initial challenge in the range of $20,000 to $25,000. The OTA said it needed about 25 carriers to pledge at least $1000 each in order to go forth.

“We had 14 or 15 carriers come through, and we’re joining forces with another group of carriers that’s launching a challenge,” Douma said. “With that other group, we made the numbers we were looking for.”

The provincial Truck Transportation Act (O. Reg. 556/92) requires companies that broker loads to keep the portion of the payment owed to the carrier in a trust account. Lawyers for KPMG say TCT Logistics is legally bankrupt and therefore is subject to federal bankruptcy laws, which would usurp any provincial regulation. They claim that any monies set aside for carriers should be released to pay secured creditors, who reportedly are owed $70 million.

The court will decide whether federal or provincial law should apply. “It’s a narrow, straightforward question,” said Douma, who believes the amount held in trust for carriers by KPMG is around $2.8 million.

Ontario is the only province to have a law that governs the legal responsibilities of load brokers.