Penske Logistics offers its side of scuffle with Loves Furniture

A few weeks before Loves Furniture filed for Chapter 11 bankruptcy protection and Penske Logistics blamed a good chunk of its problems, the 3PL itself filed a lawsuit against Loves with a different take on the relationship.

The lawsuit was filed on January 5 in the Oakland County Circuit Court in Michigan, where Loves is headquartered. Because it was filed prior to bankruptcy, it does not provide a forum for Penske to handle some of the bad service complaints that appeared in Loves’ bankruptcy filing.

Penske alleges that Loves was in financial trouble for several weeks towards the end of 2020 and was denied access to goods that could have been seized in response to non-payment.

Loves filing for bankruptcy focuses on a warehouse in Burton, Michigan as it discusses Penske’s role. The Penske lawsuit, however, discusses activities at a warehouse in Warren, Michigan, where Loves rented space but had a contract with Penske to operate logistics at that facility. This contract was signed in July 2020. It contained a “general warehouse lien” that would enable Penske to seize goods instead of missed payments.

“After Penske provided services under the agreement for several months, Loves had problems making payments for services,” Penske’s lawsuit stated. “Penske offered a wide variety of payment options and developed multiple payment options, but Loves ultimately failed to meet its obligations at every turn.”

In mid-November, Penske signaled that he would exercise the lien. “These efforts resulted in Loves making an additional payment to temporarily prevent the exercise of the lien by agreement,” the lawsuit said. It adds that Loves did not question Penske’s right to exercise that lien.

Loves ‘debt to Penske was $ 1.55 million by the end of the year, while Loves’ Chapter 11 filing lists its debt to Penske Logistics at around $ 1.6 million. This estimate of $ 1.55 million was as of December 29, 2020. On the same day, according to the lawsuit, Penske planned to conduct a “private sale of the stored goods” on January 23, “unless payment is made”.

At the time, according to the lawsuit, Loves tried to deny Penske employees access to the Warren site. Penske wanted to exercise the warehouse keeper’s lien, “but Loves is deliberately interfering in these efforts.”

In the file filed Jan. 5, Penske said his employees “saw truck traffic in and out of the facility, which likely suggests Loves is starting to illegally remove the goods from the warehouse”. The suit states that the Loves staff “stated” that they are moving inventory and that they intend to continue to do so.

Loves is doing this “to thwart Penske’s lien as Loves believes the lien will no longer be available to Penske once the goods are out of stock,” Penske said.

Penske was forced to fire some employees in the camp due to the stalemate, the lawsuit said.

In his motion for a determination, Penske states that it has the “right to possession” of the goods in the warehouse and seeks an order from the court so that it can possess goods at Warren.

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