News / IKEA asks courts to intervene as Convoy's unpaid truckers send flurry of invoices

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If you thought bankruptcy was complex – try no bankruptcy, but collapse: a situation that has led IKEA to the US courts.

IKEA has filed a lawsuit against Convoy, Hercules Capital and some 40 road transport providers in a bid to stop them invoicing the giant home furnishings retailer, because it doesn’t know whom to pay.

It’s certainly confusing. IKEA knows it owes some half-million dollars for US trucking services, but because the supplier of those services, Convoy, has shut its doors, the retailer doesn’t know what it owes to whom.

IKEA’s contract states it must only pay Convoy, not its suppliers. But the contract also states that IKEA had “the express right to withhold payment to Convoy until Convoy provided proof of the fulfilment of its obligations, which included the full payment of any subcontractors”.

Carriers, meanwhile, were prohibited contractually from sending Convoy’s customers, like IKEA, direct invoices.

In its lawsuit, IKEA claims Convoy failed to pay the carriers, and they, perhaps understandably, decided to take up the matter with IKEA instead.

“Many of the carrier defendants have notified IKEA of these intentions,” it said; about 42 of them, many of which appear to be single owner/operators, have.

And then there is Hercules Capital. Hercules secured an interest in Convoy’s assets, including its ‘accounts receivables’, as part of a financing agreement. When Convoy defaulted, Hercules foreclosed on Convoy’s assets and tried to invoice IKEA for the $519,254’s worth of transport services.

Which has left IKEA in an unenviable position.

“Since Convoy and Hercules have failed and/or refused to remit payment to the carrier defendants, IKEA has no obligation to remit payment to Convoy or Hercules and, therefore, neither Convoy nor Hercules presently possess any accounts receivable with respect to IKEA.

“As a result, a conflict exists as to whether and to whom payment may be owed by IKEA for the services rendered by Convoy and the carrier defendants in relation to the transportation of IKEA products and goods.”

In the face of more than 40 invoices, where one would have sufficed, IKEA has placed the funds with the court and asked it to determine its distribution.

“IKEA has a reasonable fear of multiple liability because of these adverse claims,” it said. “IKEA is unsure which claimant is entitled to the property or to portions of the property.”

So the retailer has asked the court to discharge it from the lawsuit, prevent each claimant from starting action against ot and award IKEA its costs.

The whole case sounds mighty frustrating for IKEA – but even worse for the tens, or perhaps hundreds, of truckers who have yet to be paid for work they have carried out.

And even more annoying for all, no doubt is that Flexport CEO Ryan Petersen, when re-launching Convoy’s platform last week, said Flexport had been able “to pick it up at a really good price”, and that Convoy should be profitable by next year.

You can’t blame Flexport for feasting on Convoy’s carcass – but it seems unfair, at the least, that so many small businesses have yet to be paid, especially when their customers are happy to pay out.