By Edgar Davison, Esq.
Davison Law Firm | 6000 Poplar Ave., Suite 250, Memphis, TN 38119 | [email protected]

I. Introduction

When a freight broker files for bankruptcy, it often leaves behind a trail of unpaid motor carriers — professionals who have already completed their work, delivered the freight, and fulfilled every obligation. The trucks have rolled, the paperwork is in order, the goods have arrived. Yet payment stalls — or disappears entirely — as the broker's financial collapse ripples through the supply chain. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

This article provides a comprehensive roadmap for motor carriers and their representatives to recover those unpaid freight charges. It breaks down the legal and practical tools available to carriers when a broker files for Chapter 7 or Chapter 11, with a focus on preserving leverage, navigating bankruptcy law, and acting swiftly. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

We begin by clarifying the scope and limits of the automatic stay — including what claims can still be pursued outside of bankruptcy court. Then we cover every major path to recovery:

• Bond Claims: How and when to file on the broker’s $75,000 BMC-84 surety bond or trust. This mechanism is crucial in cases of broker bankruptcy where carriers must enforce transportation contracts to secure freight collection.
• Shipper and Consignee Liability: The statutory and common law basis for holding others in the supply chain responsible.
• Constructive Trust & Conduit Theory: Why freight payments may never have belonged to the broker in the first place.
• Carrier Liens: Asserting a right to hold freight until payment is made — even after bankruptcy is filed. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.
• Setoff and Recoupment: Netting out mutual debts to reduce exposure or recover amounts owed.
• Critical Vendor Motions: Leveraging your importance to the debtor in Chapter 11 reorganizations to get paid.
• Preference Defenses: How to fight back if the trustee demands repayment of money you rightfully earned.

Each section is backed by case law, statutory support, and practical tips for real-world enforcement. Whether you’re an in-house claims manager or outside counsel to a transportation company, this guide is designed to help you act decisively — and legally — to protect what your client is owed.

Because when the broker goes under, carriers don’t have to go unpaid. But they do have to know the law — and move fast.

II. The Automatic Stay — And Its Limits

When a broker files for bankruptcy, the automatic stay under 11 U.S.C. § 362(a) immediately stops most collection actions — but only against the debtor and property of the estate. Critically, the stay does not apply to third parties unless a bankruptcy court explicitly says so. That means carriers are still free to pursue: In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

The shipper,

The consignee,

The broker’s surety bond,

Or assert and enforce a valid lien.

Courts across the country have made this clear. The stay “does not extend to separate legal entities such as corporate affiliates, partners in debtor partnerships or to codefendants in pending litigation,” unless a separate injunction is obtained. See Teachers Ins. & Annuity Ass’n v. Butler, 803 F.2d 61, 65 (2d Cir. 1986). Likewise, the court in Nevada Power Co. v. Calpine Corp. (In re Calpine Corp.), 365 B.R. 401, 408 (S.D.N.Y. 2007), confirmed that “[t]he automatic stay affords protection only to the debtor, not to non-debtor co-defendants.”

This principle has been reaffirmed recently in In re Diocese of Rochester, 2022 WL 1638966, at 4–5 (Bankr. W.D.N.Y. May 23, 2022), where the court held that the stay did not shield the Diocese’s co-defendants or related entities from outside litigation.

Could a bankruptcy court extend the stay to non-debtors? Yes — but only in rare cases and only upon a showing of exceptional circumstances. As explained in In re SDNY 19 Mad Park, LLC, 2014 WL 4473873 (Bankr. S.D.N.Y. Sept. 11, 2014), such relief is “extraordinary” and requires a separate motion and court order under 11 U.S.C. § 105(a).

The takeaway: Don’t assume you’re handcuffed by the stay just because a broker filed Chapter 11. Unless and until a court issues an order saying otherwise, you can — and should — pursue all available third-party claims, especially against shippers, consignees, and bonds. Always check the docket, but don’t sit on your hands. The window to act is narrow — and delay helps no one but the debtor.

III. Bond Claims: File on the Broker’s BMC-84 This mechanism is crucial in cases of broker bankruptcy where carriers must enforce transportation contracts to secure freight collection.

Every broker licensed by the Federal Motor Carrier Safety Administration (FMCSA) is required to maintain a $75,000 surety bond (Form BMC-84) or trust fund agreement (Form BMC-85). This bond is designed to protect motor carriers in precisely this situation — when a broker fails to pay for services rendered. This mechanism is crucial in cases of broker bankruptcy where carriers must enforce transportation contracts to secure freight collection.

Carriers have a direct right to file a claim against the bond for unpaid freight charges, regardless of whether the broker is in bankruptcy. The bond is not part of the bankruptcy estate, so the automatic stay does not apply. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

How to File a Broker Bond Claim

1. Find the Broker’s MC Number
   Look up the broker on the FMCSA’s SAFER site: https://safer.fmcsa.dot.gov.
2. Verify the Bonding Company
   Use the FMCSA’s Licensing & Insurance system to identify the surety: https://li-public.fmcsa.dot.gov.
3. Gather Your Documents
   Include unpaid invoices, signed rate cons, BOLs, and any proof of delivery and nonpayment.
4. Submit a Clear Cover Letter
   Summarize the loads, total owed, and attach all supporting documents. Then send the full claim package to the bonding company listed in the FMCSA system.

Claims are reviewed by the surety or trust provider, not the court. These companies are typically inundated with claims following a broker collapse — so carriers must move quickly. Bond payouts are made on a first-come, first-served basis until the $75,000 limit is exhausted. If you're number 20 in line, you may get nothing.

Don’t wait for the bankruptcy to play out. A well-supported, timely claim gives you the best shot at recovery.

Also, keep in mind that bond providers often require carriers to sign a release before issuing payment. Read those carefully, and don’t waive claims against other third parties unless it’s in your interest. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

In short: the BMC-84 is one of the most immediate and accessible tools available. Use it.

IV. Shipper and Consignee Liability: Core Paths to Recovery

When a broker fails to remit payment, the motor carrier still has powerful avenues of recovery — most notably from the shipper and, in many cases, the consignee. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Shipper Liability

Courts across the country consistently reaffirm the principle that shippers remain liable to the motor carrier, even when they’ve already paid a broker or intermediary. This is often referred to as the “bedrock rule of carriage”: absent fraud or malfeasance by the carrier, the carrier gets paid.

The leading authority is Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 513 F.3d 949 (9th Cir. 2008), where the court held that a shipper who paid a broker was still liable for freight charges to the carrier. The bill of lading governed, and no agreement had been made with the carrier to release the shipper from payment. Courts applying Oak Harbor place the risk of nonpayment by the broker squarely on the shipper. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

This principle has been echoed in numerous cases:

• Excel Transp. Servs., Inc. v. CSX Lines, LLC, 280 F. Supp. 2d 617 (S.D. Tex. 2003) – the court held that “absent malfeasance, the carrier gets paid.”
• Ranger Transp. v. Wal-Mart Stores, 903 F.2d 1185 (8th Cir. 1990) – shipper was liable after continuing to pay a broker that the carrier had warned was not remitting payment. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.
• Southern Freight v. LG Elec. USA, Inc., No. 05-A-13469-3 – carrier allowed to recover directly from shipper despite broker involvement.
• Direct Coast to Coast LLC v. Empire Foods Inc., No. L-4336-15 (N.J. Super. Ct. Apr. 12, 2018) – shipper was not excused from paying the carrier even after paying the broker.
• Contship Container Lines, Inc. v. Howard Indus., Inc., 309 F.3d 910 (6th Cir. 2002) – shipper remained liable even though the broker was named on the bill of lading.

In short, courts routinely hold that payment to a broker does not extinguish the shipper’s obligation to the carrier unless the carrier expressly waives its rights — and that rarely happens. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Consignee Liability

In many cases, consignees are also held liable for unpaid freight charges, particularly where they benefit from the shipment and accept delivery. This liability may arise by statute (e.g., 49 U.S.C. § 13706) or under common law principles like unjust enrichment or implied transportation contract or contract for transportation services.

Again, Oak Harbor is the touchstone. The Ninth Circuit emphasized that the consignee — just like the shipper — bears the risk of broker default. Other courts agree:

• Harms Farms Trucking v. Woodland Container, 2006 WL 3483920 (D. Neb. 2006) – consignee was liable even after paying the shipper.
• Spedag Americas, Inc. v. Peters Hospitality, 2008 WL 3889551 (S.D. Fla. 2008) – both consignees were held liable after paying a broker that went bankrupt.
• LLR Logistics LLC v. K & R Transp. Logistics, Inc., 2010 WL 4116903 (C.D. Cal. 2010) – consignee had to pay the carrier even though it had already paid the broker.

These decisions reinforce that consignees cannot simply point to prior payment as a defense — not when they accepted the goods and benefitted from the delivery.

There are numerous cases — many beyond the scope of this article — holding shippers and consignees liable when brokers fail to pay. These claims can be pursued under the bill of lading, federal statute, and equitable theories. For carriers and their counsel, this remains one of the most effective and reliable tools for recovering unpaid freight charges.

V. Constructive Trust & Conduit Theory: It Was Never the Broker’s Money

When a shipper pays a broker and the broker fails to pay the carrier, that money didn’t just vanish — it was never really the broker’s to begin with. More and more courts are recognizing this reality. The broker wasn’t holding payment for itself. It was holding it for the carrier. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

That’s the heart of the constructive trust or conduit theory — sometimes called the interline trust doctrine. The idea is simple: the broker was a pass-through. The money it collected was held for the benefit of the carrier, and shouldn’t become part of the bankruptcy estate when the broker goes under. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

This isn’t just academic. Carriers can use this theory to recover funds that would otherwise be tied up — or lost — in a bankruptcy proceeding.

Several courts have embraced this reasoning:

• In Parker Motor Freight v. Fifth Third Bank, the Sixth Circuit held that funds collected by a broker for payment to a carrier didn’t belong to the broker and weren’t part of its bankruptcy estate. 116 F.3d 1137 (6th Cir. 1997). In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.
• In TRM v. Freight Peddlers, Inc., the court explained that broker commissions may belong to the broker — but the underlying freight charges are held in trust for the carrier. No. 6:98-1816 (D.S.C. 1999).
• In re Computrex, Inc. reaffirmed the principle that even when brokers commingle funds, they don’t destroy the trust relationship. The money still belongs to the carrier. 403 F.3d 807 (6th Cir. 2005).
• And in both Summit Financial Resources v. Big Lake Foods, 2008 WL 762200 (D. Utah 2008), and Air Cargo Americas, Inc. v. Florida Fresh Produce Corp., No. 08-21801 (S.D. Fla. 2008), the courts protected carriers over banks and factoring companies, finding that the money owed to carriers was trust property, not general assets.

Federal law supports this too. Under 49 C.F.R. § 371.3, brokers must keep shipment-level accounting records and document every transaction — a requirement more consistent with a fiduciary role than with ownership. When a broker takes money for someone else’s service, that money shouldn’t be treated as theirs.

Bottom line: if the broker was paid and didn’t pass the money along, that payment may be traceable — and recoverable — as trust funds. These aren’t just unpaid receivables. They’re your money. Use this argument to keep those funds out of the debtor’s estate and get them back into the carrier’s hands — where they belong. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

VI. Carrier Liens: Don’t Deliver Without Payment Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

One of the most underused — and effective — tools in a carrier’s arsenal is the right to assert a possessory lien over freight in transit. If you’re holding the cargo and the broker hasn’t paid, you may have the legal right to hold that freight until you’re paid.

Under UCC § 7-307, carriers have a lien on goods in their possession for “charges incurred in connection with the transportation or storage of those goods.” This includes linehaul charges, fuel surcharges, detention, and other accessorials. Common law supports the same principle — that a carrier can retain goods until freight charges are satisfied.

This lien is not just a theory — it’s immediate leverage. A shipper may ignore your unpaid invoice. But if you notify them that the load will not be released until charges are paid, they’re more likely to get involved quickly.

Critically, asserting or perfecting a lien is not a violation of the automatic stay in bankruptcy. Under 11 U.S.C. § 362(b)(3), actions “to perfect, or to maintain or continue the perfection of” a lien that existed prior to the bankruptcy filing are expressly excluded from the stay.

That means if you hauled the freight pre-petition, and you’re holding it when the broker files, you can enforce your lien. You don’t need relief from the stay. You don’t need to go to court. You need to stand your ground and communicate your rights — in writing.

Important: Make sure your bills of lading and rate confirmations support the right to withhold delivery for nonpayment. If they’re silent or ambiguous, enforceability could be questioned.

You should also notify the shipper and consignee immediately when asserting a lien. If the shipper prepaid the broker, they may consider direct payment to resolve the matter and avoid disruption to their supply chain. You may be able to negotiate payment directly or prompt legal intervention that accelerates your recovery.

Bottom line: If you still have the freight, you still have the power. Don’t surrender it without asserting your rights. A valid lien turns a passive receivable into an active claim — one that gets attention.

VII. Setoff and Recoupment: Netting Out What’s Owed

When both the carrier and the broker owe each other money — a not uncommon scenario — setoff and recoupment can become powerful tools for reducing exposure or clawing back what’s owed. These doctrines are rooted in equity and fairness and are expressly preserved under the Bankruptcy Code. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Setoff under 11 U.S.C. § 553 allows a creditor (like a carrier) to reduce what it owes the debtor (the broker) by the amount the debtor owes it — but only if certain conditions are met:

The debts must be mutual — both arising pre-petition and between the same parties in the same capacity;

The debts must be valid and enforceable under non-bankruptcy law;

The right of setoff must exist before the bankruptcy was filed.

In other words, if a carrier owes a broker $10,000 for a detention charge on one load, but the broker owes the carrier $15,000 for a separate delivered load, the carrier may be able to assert setoff and apply the $10,000 against the amount owed — leaving a net receivable of $5,000.

Case law supports this approach. In Redmond v. IGT, 597 F. Supp. 2d 801 (D. Minn. 2008), the court held that mutual pre-petition debts could be offset even when the amounts were disputed. Similarly, in In re GMJ Global Logistics, Inc., 582 B.R. 747 (Bankr. S.D. Ga. 2018), the court permitted a carrier to assert setoff for prepetition freight charges against amounts claimed by the debtor broker.

Recoupment, on the other hand, is even broader in some respects — and isn’t limited by the Bankruptcy Code. It allows a party to withhold funds where both debts arise from the same transaction or transportation contract or contract for transportation servicesual relationship, regardless of whether the debt was incurred pre- or post-petition. Courts generally treat recoupment as outside the scope of the automatic stay.

This makes recoupment especially useful when the carrier is still moving loads post-bankruptcy but is owed money from the same master agreement or ongoing relationship. If the broker wants to enforce one part of the contract, the carrier can insist on netting out prior unpaid amounts tied to that same arrangement. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

The takeaway: if you’re still operating under the same MSA or course of dealing, and you’re owed money — don’t just pay what the broker demands. Assert recoupment or setoff and reduce your exposure. These rights survive bankruptcy and can put you in a stronger financial position without having to wait in line with unsecured creditors. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

VIII. Critical Vendor Motions in Chapter 11

In Chapter 11 bankruptcies, debtors often seek court approval to pay certain unsecured creditors — labeled “critical vendors” — outside the normal bankruptcy priority rules. The idea is to ensure that essential suppliers continue doing business with the debtor, helping preserve going-concern value and support the reorganization.

Carriers are strong candidates for critical vendor status. Transportation services are vital to ongoing operations, and if a carrier is still moving freight, the debtor (broker or shipper) may have every incentive to keep them on board — and paid.

If a broker files Chapter 11 and the carrier is providing post-petition service or is strategically important due to lane coverage, customer relationships, or service continuity, counsel should:

Monitor the docket closely for any motions requesting authority to pay critical vendors;

File a Notice of Appearance and request to be added to the creditor matrix;

Contact debtor’s counsel directly to request inclusion in any vendor payment motion;

Be prepared to show how the carrier’s services are necessary to the debtor’s ongoing business and not easily replaced.

Courts may require evidence of potential disruption or hardship if payment isn’t made — so documentation of withheld services, past-due amounts, or irreplaceable capacity can support the request.

Bottom line: If you’re still hauling for a bankrupt broker or shipper, you may be more than just an unsecured creditor. You may be the key to their reorganization — and that means you might get paid.

IX. Preference Actions: How to Keep What You Were Paid

One of the most frustrating and misunderstood hazards in a broker bankruptcy is the trustee’s attempt to claw back payments you already received. If a carrier was paid within 90 days of the broker’s bankruptcy filing, the trustee may argue that those payments are “preferences” under 11 U.S.C. § 547(b)—payments made on pre-existing debts that unfairly favored the carrier over other unsecured creditors. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

But here’s the good news: motor carriers have multiple strong defenses that, if properly asserted, can stop the clawback in its tracks.

1. Contemporaneous Exchange for New Value – § 547(c)(1)

If the freight was delivered at or around the same time payment was made—and both parties intended the exchange to be contemporaneous—then the payment is protected. Courts recognize that this type of transaction is a fair exchange, not a preference. For example, if a broker paid immediately upon delivery, or within a couple of days as a COD-style payment, it likely qualifies.

2. Ordinary Course of Business – § 547(c)(2)

Even if the payment was on account of a prior shipment, it may be shielded if it was made in the ordinary course of business. Courts evaluate whether the timing, amount, and manner of the payment were consistent with the parties’ historical dealings or common industry practices. If your payment history shows consistent 30-day terms and the payment in question followed that norm, the defense likely applies.

3. Subsequent New Value – § 547(c)(4)

If the carrier continued hauling freight after the payment at issue—and hasn’t yet been paid for those subsequent loads—then that “new value” can reduce or eliminate the trustee’s claim. This defense rewards carriers for continuing to provide service during a financially precarious time. For example, if you received $7,000, but then hauled another $5,000 worth of unpaid freight, the trustee’s claim would be reduced to $2,000. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

4. Trust Funds Were Never Estate Property

Perhaps the strongest and most overlooked defense available to carriers: if the broker was merely passing along funds received from the shipper, the money was never part of the bankruptcy estate at all. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Courts applying the conduit theory or recognizing a constructive trust have consistently held that brokers do not “own” money paid by shippers for the carrier’s benefit. Instead, the broker acts as a pass-through or conduit. In these cases, the payment is not subject to § 547 because it was never the debtor’s property. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Key cases include:

• Parker Motor Freight v. Fifth Third Bank, 116 F.3d 1137 (6th Cir. 1997): held that funds in a broker’s account designated for carriers were not part of the bankruptcy estate. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.
• In re Netexchange, Inc., 403 F.3d 43 (1st Cir. 2005): payments owed under a trust relationship were excluded from the estate’s assets.

If the broker received payment from the shipper with the intent to pay the carrier—and then paid the carrier—those funds were earmarked. That is not a preference. That is simply the completion of a trust-based or conduit transaction. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

This defense should always be explored and raised early. Many trustees overlook it, focusing only on the mechanical elements of § 547(b). But when successful, it completely removes the transfer from bankruptcy scrutiny.

Practical Tip:

If you’re hit with a preference demand, don’t panic—and don’t pay without pushing back. Preserve your records, including BOLs, invoices, emails confirming payment intent, and especially any evidence showing the broker was paid by the shipper before you were paid. These documents can be critical in asserting a conduit or trust fund defense and stopping a preference claim before it gains traction.

X. Practical Tips for Carriers and Counsel

When a broker collapses, time and leverage are everything. Whether you’re representing a carrier or managing claims in-house, here’s a checklist to protect your rights and maximize recovery:

Act immediately. Delay narrows your options. Each day that passes after a broker’s default increases the risk of losing freight, leverage, and legal standing.

File a bond claim the moment the broker appears inactive. The BMC-84 bond is capped at $75,000 — and once it’s gone, it’s gone. Don’t wait for a bankruptcy notice to take action. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law. This mechanism is crucial in cases of broker bankruptcy where carriers must enforce transportation contracts to secure freight collection.

Organize your records. Preserve all documentation: rate confirmations, signed bills of lading, delivery receipts, and broker payment instructions. Keep copies of all emails and texts that show the broker’s role and your reliance on payment.

Assert a lien if you still possess the load. Under UCC § 7-307 and common law, you have a right to hold freight for unpaid charges. This is immediate leverage — don’t give it up without using it.

Send a demand letter to the shipper. Include supporting documents and explain that under Oak Harbor and other cases, payment to a broker does not absolve the shipper and consignee unless there is a clear waiver.

Name the shipper and consignee in litigation where the facts support it. Courts will look to the bill of lading, industry customs, and who arranged or benefited from the shipment. Don’t let potential recovery go unexplored.

Use trust and conduit theory language in all filings and correspondence. Make it clear that you view the funds as held in trust — not part of the broker’s general assets. Courts are increasingly receptive to this view.

Monitor PACER. If the broker files bankruptcy, stay updated on docket activity, vendor motions, and bar dates. You may be able to assert critical vendor status or oppose improper discharge of claims. In the transportation industry, this type of broker bankruptcy often affects transportation contracts and carrier payments under a contract for transportation services. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Don’t ignore preference demands. Respond promptly and assert defenses under § 547(c). Gather documents to support ordinary course of business, contemporaneous exchange, and new value arguments. If the broker was a conduit, argue that the payment wasn’t estate property.

Engage legal counsel early. Bankruptcy and freight charge recovery is a specialized area — the sooner you’re advised, the more tools you can deploy. Waiting to “see what happens” usually results in lost leverage and reduced options.

Bottom line: The moment a broker defaults or shows signs of trouble, carriers must pivot from operational mode to legal preservation mode. These cases are winnable — but only for those who move with precision, preparation, and pressure.

XI. Conclusion

A broker’s bankruptcy may complicate the collection process, but it does not — and should not — erase a carrier’s right to payment. The transportation services were provided. The freight was delivered. The obligation remains. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

Motor carriers are not powerless. They have real, enforceable rights — even in the face of insolvency. By understanding and asserting those rights, carriers can often bypass the bankruptcy bottleneck and pursue payment through other avenues. Whether it’s holding the shipper or consignee accountable under established liability rules, enforcing a lien on freight still in possession, filing timely bond claims, or leveraging conduit and trust theories to bypass the estate altogether — the tools are there. Understanding these rights is essential for debt collection for carriers and freight payment enforcement under transportation law.

The Bankruptcy Code, too, offers strategic levers: setoff, recoupment, critical vendor treatment, and strong defenses to preference actions. But success depends on speed, documentation, and clarity of action. The carriers who recover are the ones who act decisively — not the ones who wait in line with unsecured claims and hope for crumbs.

The takeaway is simple: know your tools, assert your rights, and move quickly. Because the money is out there — in bond proceeds, trust funds, and shipper accounts — but only for those who go after it with purpose. Don’t let what you’ve earned vanish in a bankruptcy file. Get paid.

About the Author

Edgar Davison is a transportation attorney licensed in Tennessee and Arkansas who represents motor carriers nationwide in freight charge disputes, broker defaults, and commercial litigation. A longtime advocate for carrier rights, he brings practical, battle-tested strategies to help trucking companies get paid. When he’s not in court or writing about freight law, you’ll likely find him on the running trail or deep into a game of blitz chess.

Contact:
Edgar Davison, Esq.
Davison Law Firm
6000 Poplar Ave., Suite 250
Memphis, TN 38119
(901) 230-7749
[email protected]