Receiver scrambles to make truckers pay after CoreFund Capital abruptly shuts down
Court-appointed receiver Timothy Hassenger is scrambling to get hundreds of trucker accounts receivable paid nearly three weeks after a legal wrangle between brothers over the assets of a family trust led to the abrupt closure and layoff of all employees of CoreFund Capital, a Texas-based factoring company.
Some small business truckers were forced out of business or unable to pay their drivers or buy fuel when CoreFund stopped responding to phone calls or emails from desperate truckers after the office closed on July 18.
Since Parker County, Texas District Judge Graham Quisenberry appointed Hassenger as receiver of CoreFund last week, Hassenger and former employees are back in office to “restore CoreFund operations.”
On Friday, Michelle Buckalew, chief executive of public relations firm Sunwest Communications, said CoreFund is “fully operational” as Hassenger, along with CoreFund employees, works to meet “customer needs and provide cash solutions and the level of care and service they deserve.”
Buckalew has been hired to work with CoreFund’s communications team and escrow to address carrier concerns.
In an email to FreightWaves, Buckalew said CoreFund was solvent and planned to stay open once truckers were paid.
She said Hassenger plans to release carriers who want to find a new factoring company, but “many choose to stay with CoreFund.”
Some carriers have expressed concern that if they stay with CoreFund, they fear they will find themselves in the same situation in a month or two if the feud between Meir “Shim” Sacks and his younger brother, Yaakov “Jacob” Sacks , is not resolved. .
“The brothers can’t disrupt the business while it’s in receivership,” Buckalew said.
Read more here: Carriers unable to pay drivers, buy fuel after CoreFund Capital shuts down
What is the quarrel about?
According to court documents, Shim Sacks founded CoreFund Capital in 2014. CoreFund is a wholly owned subsidiary of GMA Fund LLC, the holding company of the Shim Sacks Family Legacy Trust, which he established in October 2014.
As part of the original trust, Shim Sacks granted special power of appointment to Jacob Sacks.
According to court documents, Jacob Sacks “exercised this special power of appointment that he has” under the original trust and transferred the assets of the trust, including the holding company that owns CoreFund, to a new one. trust he established, the Sacks Family Grandchildren’s Trust, in July. 12.
A review of court records in Pennsylvania, where the two brothers live, shows that Jacob Sacks and his company, Sacks Medical Corp., pleaded guilty in federal court to money laundering and violating federal drug laws in February 2010 .
The law firm Warren Fonville of Fort Worth, Texas, which represents the younger Sacks, did not respond to FreightWaves’ request for comment.
Shim Sacks did not respond to FreightWaves’ request for comment.
While the old trust only named Shim Sacks’ children as beneficiaries, the new trust lists the children of both brothers as beneficiaries. It also appoints longtime CoreFund chairwoman Bonnie Castillo as the sole manager of CoreFund.
It is unclear why Jacob Sacks created the new trust.
Truckers were hit with a double whammy after CoreFund went dark in mid-July and no one was in the office to release them from Uniform Commercial Code (UCC-1) liens filed by the factoring company against the carrier assets. They also needed a revocation of an assignment notice sent to the truckers’ customers asking them to make payment to CoreFund, which in turn pays them.
Jason Medley, a partner at the law firm Spencer Fane in its Houston office, represents more than 100 trucking companies that have been impacted by the CoreFund shutdown.
He said CoreFund’s situation is rare in the factoring world.
“It’s a moving target for sure,” Medley said in an email to FreightWaves. “After several communications with their team, we are allowing Receiver staff and CoreFund staff (many of whom we are told have returned to work under the ongoing receivership) time to access computer systems and to review the list of our carriers, which number slightly over 100 at the moment.
During a videoconference status hearing Wednesday with factoring companies, as well as lawyers and truckers, Medley said carriers just want to get back to work even if it means leaving CoreFund for another company. factoring.
“We just need people behind the wheel to be released so they can haul loads and get paid,” Medley told FreightWaves. “The world already has enough supply chain problems. And there are tons of great factoring companies that are ready, willing, and able to pick up the pieces. We just need them to be allowed to.
He warned factoring companies to be careful if they decide to finance truckers because of the UCC liens and assignment notice that are still in place with CoreFund.
She said CoreFund plans to release carriers who want to find a new factoring company, but it could be risky for companies already factoring accounts receivable from CoreFund truckers.
“CoreFund’s UCC declarations are still in place, and any factoring company that makes a loan is in a second lien position,” she told FreightWaves.