Zuum Transportation - Case Summary

Business Description

Zuum Transportation Inc. operates as a transportation and technology enterprise within the U.S. trucking industry, composed of two primary business lines: a digital freight brokerage (the “Brokerage Business”) and an industry-focused software platform (the “Software Business”).

• The Company’s core focus is its Software Business, centered on its Transportation Management Software (TMS) platform. The Debtor considers this segment the foundation of its long-term value and future growth.
  • The TMS Platform is a cloud-based, enterprise-grade system offered on a Software-as-a-Service (SaaS) model, designed to automate and streamline freight management for shippers, freight brokers, carriers, and drivers.
  • Its modular architecture allows customers, including enterprise clients like FedEx Custom Critical, to deploy specific functions or integrate the platform into existing systems via APIs.
• The Brokerage Business functions as a digital freight brokerage, acting as an intermediary between its shipper customers and a network of over 35,000 carriers.
  • Utilizing a software-based approach with API pricing, the platform provides customers with real-time carrier pricing, route optimization tools, and load tracking.
  • The Debtor’s brokerage customers include major consumer goods suppliers such as General Motors and Hyundai Glovis.

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Corporate History

Founded in 2016, Zuum initially established its nationwide freight brokerage services to connect shippers with carriers for goods delivery. To address longstanding inefficiencies in the logistics market, the Company subsequently developed its proprietary TMS platform, which provides configurable modules for managing load tendering, carrier sourcing, dispatch, tracking, and billing from a single system.

• The Brokerage Business grew substantially, at its peak managing thousands of monthly freight-loads for more than 235 customers, including several Fortune 500 companies.
• In parallel, the Software Business has experienced significant expansion, achieving over 100% year-over-year sales growth from 2024 to 2025.

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Operations Overview

The Company operates with two distinct business models corresponding to its software and brokerage segments. As a debtor-in-possession, Zuum intends to stabilize its operations and focus on preserving the long-term value of its profitable Software Business while winding down its brokerage operations.

Software Business Model

• The Company generates revenue through recurring license fees from its Software Customers, which include freight brokers, shippers, and carriers.
• License fees are typically paid monthly, quarterly, or annually, with the amount determined by factors such as transaction volume, number of users, and activated features.

Brokerage Business Model

• Zuum enters into shipping contracts directly with its Brokerage Customers, who are obligated to pay brokerage fees generally within 30 to 60 days of completed delivery.
• The Company enters into separate arrangements with carriers, whom it is obligated to pay carrier fees generally within 30 to 45 days of completed delivery, creating a working capital imbalance where payments are made to carriers before corresponding revenues are received from customers.

Chapter 11 Go-Forward Strategy

• The Debtor’s primary goal in bankruptcy is to continue growing its Software Business by servicing existing customers and securing new licensing contracts.
  • The Company anticipates closing new software contracts worth over $1.289 million in annualized revenue by March 2026, which would generate approximately $1.039 million in cash upon signing.
• To fund ongoing operations, including payroll, contractor costs, and other operating expenses, the Debtor is seeking to use cash collateral. The Company projects that continued collection of legacy accounts receivable from the Brokerage Business, combined with new software sales, will support its liquidity needs and increase its cash position during the bankruptcy case.

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Prepetition Obligations

As of the Petition Date, the Debtor’s capital structure includes approximately $9.18 million in secured debt obligations held by two lenders with liens on substantially all of the Company’s assets. The collateral package includes approximately $710,578 in cash, $7.4 million in accounts receivable, and intellectual property valued between $6.8 million and $30 million.

Wex Credit Facility

• Approximately $4.5 million is outstanding to Wex Bank under a revolving line of credit.
• Pursuant to an intercreditor agreement, Wex holds a senior, first-priority lien on the Debtor’s cash and accounts receivable.

Trinity Loan

• Approximately $4.68 million is outstanding to Trinity Capital, Inc. under a loan and security agreement.
• Under the intercreditor agreement, Trinity holds a second-priority lien on the Debtor’s cash and accounts receivable but maintains a senior, first-priority lien on other collateral, including the Company’s intellectual property.

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Events Leading to Bankruptcy

The Debtor’s financial distress stems from sustained financial losses in its lower-margin Brokerage Business, which depleted the cash reserves needed to fund the growth of its profitable Software Business. Despite the success of its software segment, the Company’s overall liquidity was eroded by market and operational challenges within its brokerage operations.

• The Brokerage Business suffered from negative operating margins driven by declining freight rates, reduced shipment volumes, and increased carrier costs.
• The Debtor’s cash flow was further disrupted by:
  • Delayed payments and chargebacks from brokerage customers for shipment issues.
  • Carriers contacting the Debtor’s customers directly for payment, causing customers to withhold or delay payments owed to the Debtor.
• High fixed costs related to insurance, compliance, and personnel, coupled with disputes over receivables, limited the Company’s access to financing.

In an effort to avoid a bankruptcy filing, the Debtor attempted to restructure its Brokerage Business by downsizing its workforce by approximately 19 employees, reducing overhead, and negotiating more favorable payment terms. However, these measures were insufficient to resolve the Company’s liquidity issues. Consequently, the Debtor ceased most of its brokerage operations shortly before filing for Chapter 11 protection on November 6, 2025, to stabilize its business and maximize the value of its core software assets.