Ikea asks federal court to settle $500,000 dispute between Convoy and truckers

The collapse of Convoy has left truckers unpaid for completed shipments, forcing many of them to reach out to the shippers for payment. One such shipper, Ikea, has filed a federal lawsuit to resolve who is responsible for paying the truckers: Convoy or its customers?

Last October, Convoy abruptly shut its doors, putting an end to a company once worth billions of dollars that had attracted big-name investors like Bill Gates and Jeff Bezos. Consequently, small-business truckers expecting a payment from the startup freight brokerage still are waiting to get paid.

Although owner-operators and small fleets are turning to shippers for their paycheck, it is not clear if the shippers are on the hook. The question of who is liable for payments to truckers is the center of a lawsuit filed by Ikea against Convoy and more than 40 small-business trucking companies.

Earlier this year, Ikea filed an interpleader lawsuit in an Illinois federal district court. An interpleader lawsuit is filed by a party who owns property that is being claimed by multiple parties. The court is asked to decide who has the rights to that property, which is placed into the custody of the court. In this case, the property is more than $500,000 owed for Ikea shipments brokered by Convoy.

According to court documents, Ikea entered into a contract with Convoy that was good from July 2021 through June 2024. Per the contract, Ikea was to pay Convoy for shipments after all obligations had been fulfilled. Among those obligations was “full payment to subcontractors.” Ikea could withhold payments until all obligations were met.

On the other side of the transaction, Convoy’s contract with truckers states that the company will pay motor carriers “regardless of whether shippers pay Convoy.”

In exchange for this guarantee of payment, truckers cannot invoice or otherwise try to collect payment directly from the shipper.

Ikea’s lawsuit claims the Convoy has not paid the more than 40 named trucking defendants. Despite the terms of the contract, trucking companies are reaching out to Ikea in an attempt to collect payments. In addition to the trucking companies, numerous freight factoring companies also are seeking payments arising from Ikea shipments brokered by Convoy.

Caught in the crossfire between Convoy, Ikea and trucking companies is venture-debt investing company Hercules Capital. The lending company provided substantial financing to the startup digital brokerage. As part of the financing agreement, Hercules Capital secured interest in Convoy’s assets, including its accounts receivables.

After Convoy defaulted on the loan, Hercules Capital foreclosed on its assets. Consequently, the investment firm has notified Ikea of its attempt to collect the $500,000 in shipments. However, Ikea claims that it owes Hercules Capital nothing since neither it nor Convoy has paid truckers for their services.

Two things are certain. First, Ikea owes more than $500,000 for shipments brokered by Convoy. Second, truckers and factoring companies are owed part of that money.

What is not certain is who owes whom.

Ikea has deposited with the court the full amount it is liable for under its contract with Convoy. Essentially, Ikea is asking the court to remove the company from the lawsuit and to settle the dispute between the defendants, washing its hands of the ordeal. Ikea also wants the court to prohibit all of the defendants from seeking further action against it related to the money owed.

Last November, Flexport acquired Convoy’s technology and intellectual property. In February, Flexport announced the launch of the Convoy Platform, effectively resurrecting the load board. Flexport did not acquire any of Convoy’s assets or liabilities, taking the current version of the load board off the hook for any outstanding disputes, including Ikea’s. A Flexport spokesperson told Land Line that carriers seeking more information about disputes with the previous lenders can reach out to the parties at the following email addresses:

Claims: support@convoy-collections.com

1099 requests: 1099support@convoy-collections.com

Invoices: AP@convoy-collections.com LL