Velocity Express Files for Bankruptcy

(Reuters) – Package delivery company Velocity Express Corp (VEXP.PK) and 12 of its affiliates filed for Chapter 11 protection in a Delaware court on Thursday, court filings showed.

The company said its revenue had dropped 35 percent in the past year as many of its customers cut their shipping expenses.

Velocity added that it was party to 10 class action lawsuits and had received several assessments from state administrative agencies alleging that the company had improperly classified individuals as independent contractors rather than employees.

The Westport, Connecticut-based company listed assets of about $94.1 million and debt of about $120.6 million in its bankruptcy filing.

Velocity operates primarily in the United States with limited operations in Canada.

Shares of the company were down more than 17 percent at 12 cents in afternoon trade on the Pink Sheets.

The case is In re: Velocity Express Corp, U.S. Bankruptcy Court, District of Delaware (Delaware), No. 09-13294. (Reporting by Santosh Nadgir in Bangalore; Editing by Maju Samuel)

peHUB Notes: ComVest Group has agreed to acquire Velocity Express, as part of the prepackaged bankruptcy. TH Lee Putnam Ventures held around 25% of Velocity Express’ common stock, as of May 1, 2009.