Brokers that went out of business

What actually happens when a broker fails

A broker sits between the shipper and you. The shipper pays the broker, the broker is supposed to pay you. When the broker runs out of cash, the shipper's money is already gone and your invoices are stuck in an empty company. Brokers rarely give warning. The first sign is often a bounced quick-pay, a disconnected phone, or a notice from a bankruptcy court.

Carriers have more options than most realize, but every one of them is time-sensitive.

Recovery paths we pursue

1. Surety bond or trust fund claim (BMC-84 / BMC-85)

Federal law requires every licensed property broker to maintain $75,000 in financial security. When a broker fails, carriers file claims against it. The surety pays valid claims until the money runs out, and it often runs out fast. We identify the surety from FMCSA records, file a documented claim immediately, and push back when the surety tries to deny or discount it.

2. Proof of claim in the bankruptcy case

If the broker filed Chapter 7 or Chapter 11, the automatic stay stops direct collection, but you can file a proof of claim by the court's bar date. We prepare it properly, monitor the case, and object to plans or distributions that shortchange carriers.

3. Claims against the shipper

In many circumstances the shipper (or consignee) remains liable to the carrier for freight charges even though it paid the broker. Whether that applies depends on the bill of lading terms, whether the Section 7 non-recourse box was signed, the parties' course of dealing, and the law of the relevant jurisdiction. This is frequently the most valuable route, and the one brokers and shippers hope you don't know about.

4. Claims against principals and affiliated companies

Brokers that operate through undercapitalized shells, commingle funds, or move business to a new MC number while leaving the old one to die can expose their owners and successor entities to liability. We investigate and pursue them where the facts support it.

Preference demands: when the trustee comes after you

Months after a broker files bankruptcy, carriers often receive a demand letter from the trustee seeking return of payments received in the 90 days before the filing. These "preference" claims are real, but they are highly defensible. Ordinary-course-of-business and subsequent-new-value defenses frequently reduce them to a small fraction or to zero. We defend these on a flat-fee basis so you know the cost up front.

Deadlines that matter

Action	Typical timing
Bond / trust fund claim	As soon as possible. Funds are paid first come, first served.
Bankruptcy proof of claim	By the bar date set by the court, often 70–90 days after the case begins.
Civil action for freight charges	Up to four years from non-payment under most states' contract law; varies by state and by the debtor.
Responding to a preference demand	Trustees typically give 20–30 days before filing suit.