Small business truckers who rely on CoreFund Capital for factoring their accounts receivable are now struggling to stay in business following the abrupt closure of the company.
Factoring companies purchase outstanding invoices from companies with slower-paying customers to provide them with immediate cash flow. CoreFund offers same-day factoring to trucking companies throughout the nation to help clients who need access to funds to make their payroll, purchase fuel or inventory, or fulfill orders. Hundreds of small business truckers depend on their services to stay afloat.
CoreFund Capital, which is based in Texas, suddenly closed its doors late last month and fired all of its staff amid a legal dispute between two brothers involved in the company's ownership. This has left their clients scrambling to cover costs.
Rival factoring companies have reported receiving countless calls from CoreFund's trucking clients, many of whom are concerned they will have to stop doing business because they cannot pay their drivers or buy fuel.
Complicating matters is a lack of communication from CoreFund executives and a failure to follow procedures that would enable other brokerages and factoring companies to help the affected truckers.
John J. Jerue Truck Broker’s Director of Operations, Tony Ginevra, explained to Freight Waves that he cannot pay carriers who factor receivables through CoreFund.
“I had a carrier trying to get us to pay him directly — he’s called me a dozen times today — but there’s nothing we can do until we have a notice of assignment from CoreFund that this trucking company has gone to them for funding and CoreFund sends us an invoice, which we will pay the same day,” he said.
“I feel for these guys because many are living load to load right now, but we legally can’t pay the carriers directly because we have to pay CoreFund first.”
Until CoreFund releases Uniform Commercial Code liens that were filed by the factoring company against the assets of carriers, truckers will be unable to get relief. In addition, a revocation is required of the notice of assignment that was sent to these truckers' clients telling them to make their payments to CoreFund, who then pays the truckers.
Court makes a move that could help truckers access funds
Last week, a District Judge in Parker County, Texas, Graham Quisenberry, appointed a receiver acting on behalf of CoreFund in the hopes of helping truckers to access their funds faster. This is viewed as a positive step as the receiver could act on behalf of CoreFund to make the necessary payout arrangements, but it will still take some time for funds to be paid.
At the heart of the CoreFund Capital shutdown is a feud between CoreFund Capital founder Meir Sacks and his brother, Yaakov, and is related to a family trust.
Although the company’s executives have not released any statements about its future, some former employees who have access to the CoreFund Facebook account have been updating it in response to comments from panicked trucking customers. They maintain that they are legally and physically unable to release funds or send release letters, however.
CoreFund Capital’s former business development officer Todd Waller, who was among the staff members fired, released a statement on LinkedIn about the lawsuit and its effects on small business truckers.
“Our staff is hurting and struggling with this as we were completely blindsided,” he wrote. “Additionally, we are saddened and sickened by how this is impacting our clients who we consider family and we are legally unable to do anything to help as they struggle to stay in business.”
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