A freight broker bankruptcy leaves your unpaid invoices as general unsecured claims, the last class paid in a liquidation and paid pro rata when anything is left, which in a broker's Chapter 7 is usually nothing. Your realistic money comes from two other places: the broker's $75,000 surety bond or trust, which is one pot shared by every carrier the broker owes, and your factoring contract, which decides whether an advance you already received stays yours. Everything else is paperwork and patience.
The pattern repeats. Surge Transportation filed Chapter 11 in July 2023 owing about $12 million to around 5,000 carriers against a $75,000 trust. Convoy shut down that October and never filed at all, leaving factoring companies with what OTR Solutions' president later put at more than $100 million in exposure across the industry. In January 2026, R&R Family of Companies stopped operating with about $65 million in unpaid trade payables, and as of October 1 no R&R operating company had filed for bankruptcy, so carriers were left to sue or claim on bonds. This guide covers what each outcome means for your invoices, how the bond actually pays, what your factor owes you under recourse and non-recourse, and the ten things to do in the first week.
First, find out which thing happened, because "went bankrupt" covers three different situations. A shutdown is a broker that stopped operating without filing anything; Convoy did this in October 2023, and FreightWaves confirmed in December that it never filed. Chapter 11 is a reorganization: the broker keeps operating under court supervision, proposes a plan, and creditors vote; Surge Transportation did this in 2023 and STG Logistics, a drayage and rail intermediary with a network of 25,000 carriers, did it in January 2026 and had a plan approved by May. Chapter 7 is liquidation: a trustee sells what is left and distributes it; Transplus Freight System, a Mississippi brokerage, did this in June 2023 with more than 60 small carriers listed as unsecured creditors and a petition stating that "no funds will be available for unsecured creditors."
In any bankruptcy, the moment the petition is filed an automatic stay under 11 U.S.C. 362 freezes collection against the broker. You cannot sue, you cannot keep calling for payment, and under uscourts.gov's description the stay "requires no judicial action" to take effect. Your invoice becomes a claim in the case.
Where your claim sits is the bad news. Under 11 U.S.C. 726, secured creditors and priority claims are paid first, then "any allowed unsecured claim," and within each class payments are made pro rata. Freight charges have no statutory priority. You are a general unsecured creditor, in the same class as the broker's software vendor and its landlord, and in a Chapter 7 that class is routinely paid nothing. In a Chapter 11 you may get a percentage under the plan, but no published statistic exists for carrier recoveries in broker cases, and the Surge and STG plans did not report one.
One more structural fact: in Surge's case, 16 of the top 20 unsecured creditors were factoring companies, not carriers. Factors buy the invoices, so factors hold the claims. That matters for who sits on the creditors' committee, and it matters for section 3.
So the bankruptcy estate is mostly a dead end. Where does the money actually come from?
Chapter 7 vs. Chapter 11: Chapter 7 is liquidation, where a trustee sells the broker's assets and unsecured creditors like carriers are usually paid nothing. Chapter 11 is reorganization, where the broker keeps operating and proposes a plan that may pay unsecured claims a percentage. A shutdown with no filing is neither, and leaves you to sue or claim on the bond.
Under 49 CFR 387.307, every property broker must keep a $75,000 surety bond (Form BMC-84) or trust fund (Form BMC-85) in effect, and the instrument exists to provide "payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements, or arrangements for the supplying of transportation." Since January 16, 2026, trusts must hold cash, irrevocable letters of credit, or Treasury bonds that can be liquidated within 7 calendar days. That is the whole safety net, and the statute behind it, 49 U.S.C. 13906, sets the minimum "regardless of the number of branch offices or sales agents."
It is an aggregate cap, not a per-carrier promise. The D.C. Circuit settled this in RLI Insurance v. All Star Transportation in 2010: 68 truckers filed claims totaling $161,823.50 against a broker's bond, then $10,000, and the court held the surety's liability was discharged once payments reached the face value in total. The bond is $75,000 now, and the principle is the same. Under 13906(b)(6), when claims exceed the available security, "payment is made pro rata." A surety administrator's own example: $100,000 in valid claims, every claimant gets 75 percent. In Surge's case the top 20 unsecured creditors alone were owed $8,336,119. Run the division.
How to file. Look up the broker by MC number in FMCSA's Licensing and Insurance record (or the new Motus system) to find the surety or trustee of record, then submit a claim for each load with the rate confirmation, the signed bill of lading or proof of delivery, your invoice, and any broker-carrier agreement. The surety must respond within 30 days of receiving the claim and state grounds for any denial. The common denials are predictable: the load moved outside the bond's effective dates, no proof of a broker-carrier contract, the bond is exhausted, or the claim is for accessorials like lumper and detention rather than freight charges. Bond claims cover freight charges, not cargo damage.
The 60-day clock. When a surety determines a broker has failed financially, it cancels the bond and FMCSA posts the failure in its public Register. From that posting, under 387.307(f)(4), the surety "must accept claims... for 60 calendar days." Carriers who hear about a collapse on social media and wait for a letter from the surety are waiting for a letter that does not come; the Register posting is the notice. Loads hauled before a bond is replaced are still covered by the old surety under 387.307(d)(2)(ii), so a mid-collapse bond switch does not strand earlier invoices.
The bankruptcy carve-out most carriers get wrong. The automatic stay protects "the debtor" and "property of the estate." The surety is neither. Courts generally refuse to extend the stay to non-debtor sureties and guarantors, and the regulation itself says in 387.307(f)(2) that "a filing related to the broker pursuant to Title 11 of the United States Code does not constitute financial failure or insolvency." The practical result is that a bankruptcy filing switches off the suspension machinery in the rule, but it does not switch off the surety's statutory duty under 13906(b)(2) to pay valid claims when the broker consents, fails to respond, or a judgment is entered. File the bond claim and the proof of claim. They are separate tracks.
Which raises the question carriers who factor ask first: if I already got my advance, do I have to give it back?
A $75,000 bond against a $12 million failure pays pennies. Surge Transportation owed about $12 million to roughly 5,000 carriers against a $75,000 trust. Pro rata, that is well under one cent on the dollar before the surety's 60-day window even closed. The bond is a backstop for one bad broker with a few unpaid loads, not for a collapse.
This is where the money is decided, and it was decided when you signed. Every factoring contract is one of two kinds when a broker fails, and the published program pages of the major trucking factors describe the difference in their own words.
Recourse: you give the advance back. Under a recourse agreement, in RTS Financial's wording, "your company must buy back any invoices that the factoring company is unable to collect payment on." RTS says that after 90 days the factor "may 'recourse' the invoice back to you," by withholding from future advances or deducting from your reserve. Bobtail describes the same mechanics: "Under a recourse agreement, you stay on the hook if that broker never pays," most agreements set a window of 60 to 90 days past due, and Bobtail's standard path is to swap in another invoice of equal value from a paying customer rather than debit your account. Either way, the broker's bankruptcy is your loss, less whatever the bond eventually pays.
Non-recourse: the factor eats the credit loss, under conditions. Apex Capital's definition is the clearest: "The factor assumes the risk of non-payment, specifically caused by bankruptcy or insolvency," while the carrier remains responsible for "non-credit issues like disputes, short pays, claims, or paperwork problems." Apex also warns, in the same post, that "most factoring companies limit non-recourse protection to only their pre-approved brokers and shippers" and that "many programs cut off coverage after just 90 days." OTR Solutions markets its version as True Non-Recourse: "once our carriers are paid, they stay paid, even if the broker defaults on payment or goes out of business," with "no chargebacks, even after 90 days." Its own condition is stated on the same page: "Protection applies only when working with brokers approved to factor with OTR Solutions." Triumph puts it in one line: "Triumph takes the risk on approved brokers, no charge backs!"
Read the three conditions that recur across all of them. The event must be credit insolvency, not a dispute. The broker must have been approved by the factor before you hauled. And the coverage window, if there is one, must not have expired. A carrier who hauls for a broker their factor declined, or who lets an invoice sit unfactored for 95 days, is a recourse carrier whatever the brochure says. Our recourse vs. non-recourse guide goes through the contract language clause by clause.
Who files the bond claim when the invoice was factored? Once you sell an invoice, the factor owns the receivable and is the creditor of record; that is why factors fill the creditor lists in broker bankruptcies. Whether the factor or you files against the bond depends on your agreement. Under true non-recourse, the factor has the loss and the claim, and chasing the bond is its job. Under recourse, the invoice comes back to you, and so does the claim. Ask your factor in writing which it is the day the news breaks.
The scale of what factors absorb. When Convoy shut down overnight in 2023, OTR's president told FreightWaves in August 2026 that it left factoring companies "with exposures above $100 million industry-wide," and that OTR absorbed its own loss rather than recovering from carriers. That is the product working as sold. It is also why non-recourse costs a premium, which RTS puts at up to "a full percentage" point, and why factors run broker credit before every load.
So what does each setup cost you on a real stack of invoices?
Non-recourse protection only applies to brokers your factor approved before you hauled, only for credit insolvency, and often only inside a 90-day window. Haul for an unapproved broker, let a dispute stand, or miss the window, and the broker's bankruptcy is your loss under a contract that still says "non-recourse" on the cover.
Take three $3,000 loads delivered the two weeks before a broker fails, $9,000 outstanding. Assume a 3 percent factoring fee and a 90 percent advance, and assume the bond, after the pro rata split, pays 5 cents on the dollar, which is generous by the Surge arithmetic.
No factoring. You are owed $9,000 by the estate and you file on the bond. The bond pays $450. The estate, in a Chapter 7, pays nothing. Net loss: $8,550, plus the hours.
Recourse factoring. You received $8,100 in advances and the $270 fee was paid. At day 90 the factor charges back $8,100 against your reserve or your next funding, or you swap in $8,100 of good invoices. You file on the bond for $450. Net loss: about $8,370, and your cash flow takes the hit in one week instead of three months.
True non-recourse factoring, broker approved. You received $8,100 and the $270 fee bought the credit protection. The factor absorbs the $8,100, files on the bond for its own account, and your reserve releases as normal. Net loss: the $270 fee and the $900 reserve on the three loads that would have released on payment, depending on your contract's reserve treatment for insolvency. Call it $270 to $1,170. The difference between this line and the first one is $7,400, and it was decided by a signature months earlier.
Two more exposures hide in the same scenario.
Preference clawback. If the broker paid you in the 90 days before its petition, the trustee can sue to take those payments back under 11 U.S.C. 547 as "preferences," on the theory you were paid ahead of other creditors. A Delaware trustee in the Leading Edge Logistics Chapter 7 filed about 86 such suits, mainly against subcontracted carriers. Your defenses: the payments were in the ordinary course of business on your normal terms (547(c)(2)), and transfers under $8,575 in aggregate cannot be clawed back from a business debtor at all (547(c)(9)). Keep the paper that shows your terms were normal. A demand letter two years after you were paid is not a scam; it is bankruptcy law.
The shipper. The Supreme Court held in 1982 that "unless the bill provides to the contrary, the consignor remains primarily liable for the freight charges," and the Ninth Circuit applied that to a broker failure in Oak Harbor Freight Lines v. Sears in 2008: Sears had paid the broker, the broker never paid the carrier, and Sears was held liable anyway, because the shipper is "in the best position to avoid liability for double payment." Transportation lawyers at Benesch summarize it as "in most instances the carrier has a right to pursue the shipper." The outcome turns on whether the bill of lading is marked prepaid or collect, whether the shipper signed the Section 7 non-recourse box, and whether a separate shipper-carrier contract exists; some courts apply estoppel the other way. It is a real claim, it is the one that most often gets a broker's unpaid invoices quietly paid, and it needs a lawyer.
File on the bond and file a proof of claim in the bankruptcy, both, the same week. The bond claim needs the rate con, signed POD, and invoice per load; the proof of claim is Official Form 410, due 70 days after the order for relief in a voluntary Chapter 7 or by the court's bar date in a Chapter 11. Neither filing costs anything but time.
Day one, in this order:
What changed on January 16, 2026. The broker financial responsibility rule now requires a surety or trustee to notify FMCSA within 2 business days of any payment or determination that drops the security below $75,000, after which the broker has 7 business days to restore it or its authority is suspended. Sureties that fail their duties can be barred from the business for three years. The rule makes a broker's trouble visible faster, which is good for the next carrier and no help to the last one. A bankruptcy filing, as noted, sits outside that machinery.
Choosing a factor with this in mind. Nothing in this article is a reason to avoid brokers; it is a reason to know whose credit is behind every load. The best non-recourse factoring companies and the 2026 rankings score how each factor defines the covered event, whether coverage survives 90 days, and how broker approval works, because those three clauses are the entire difference between the first line and the third line in section 4.
Rarely from the bankruptcy itself: carriers are general unsecured creditors, paid last and pro rata, and in broker Chapter 7 cases usually paid nothing. Your realistic sources are the broker's $75,000 bond (pro rata with every other claimant), a non-recourse factoring contract if the broker was approved, and in some cases the shipper.
No. The stay under 11 U.S.C. 362 protects the debtor and the estate, not a third-party surety, and 49 CFR 387.307 states that a bankruptcy filing does not by itself constitute financial failure. File the bond claim with the surety and a proof of claim in the case; they are separate tracks.
Sixty calendar days from the date FMCSA posts the broker's financial failure in its public Register. The surety must respond within 30 days of receiving a claim. If claims exceed $75,000, every valid claimant is paid pro rata.
Under recourse, yes: the factor charges back or swaps the invoice, typically 60 to 90 days past due. Under non-recourse, no, provided the broker was approved by the factor before you hauled, the non-payment is credit insolvency rather than a dispute, and any coverage window has not expired.
Often. Under Southern Pacific v. Commercial Metals and Oak Harbor v. Sears, a shipper that paid the broker can still be liable to the carrier unless the bill of lading says otherwise, and the shipper is treated as best placed to avoid double payment. It depends on prepaid or collect marking, the Section 7 box, any shipper-carrier contract, and the court; get a transportation attorney.
Under 11 U.S.C. 547 a trustee can recover payments the broker made in the 90 days before filing. Payments made in the ordinary course of business on your normal terms are defended under 547(c)(2), and aggregate transfers under $8,575 cannot be recovered from a business debtor. Keep records showing your terms were normal.
A shutdown is not a bankruptcy. Convoy never filed, and as of October 1, 2026 no R&R Family of Companies operating entity had filed either, only its CEO personally. With no case there is no stay, no trustee, and no proof-of-claim deadline; carriers sue, claim on the bond inside the 60-day window, and pursue the shipper.
A $75K bond to cover $8.3 million in losses is a joke.
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