Ikea Wants Court to Solve $500,000 Dispute for Carriers Unpaid by Convoy
Ikea is filing suit against Convoy and dozens of carriers and freight financing companies to settle a dispute over where more than $500,000 is owed in the wake of the trucking marketplace’s collapse.
The Swedish home furnishings retailer filed the interpleader complaint in early January in the U.S. District Court for Northern Illinois, listing Convoy and 58 other named parties as defendants. Defendants include a major Convoy lender, Hercules Capital, as well as subcontracted carriers and associated factoring companies.
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The case is different from a traditional plaintiff-defendant lawsuit. An interpleader case is a civil procedure in which the real dispute is not between the plaintiff and the defendant, but is rather between the defendants only, who interplead against each other. Such a suit can be levied when one party has, or is alleged to have, any money or other property in their possession that is claimed by two or more parties.
In this case, Ikea knows it owes several parties $519,254.44, which it handed over to the court. With the suit, Ikea is seeking the court’s guidance on who among the identified parties should get paid since Convoy shut its doors.
Sourcing Journal reached out to Ikea and Convoy.
Under Ikea’s contract with Convoy, the freight brokerage had agreed to facilitate the transportation and distribution of the retailer’s products and goods throughout the U.S. from July 1, 2021 to June 30, 2024.
But Convoy announced it was ceasing operations in October 2023, and has such, never made certain payments owed to the subcontractor carriers that delivered loads for the retailer. Therefore, Ikea never paid Convoy.
The retailer argues that services “shall only be payable by [Ikea] to [Convoy] if [Convoy] has fulfilled all of its obligations set forth in the agreement and any obligation in relation to the services, including but not limited to the full payment to subcontractors…Ikea had the express right to withhold payment to Convoy until Convoy provided proof of the fulfillment of its obligations, which included the full payment of any subcontractors.”
Carriers often will go to the shipper directly in cases where the broker can’t make a payment. Ikea confirmed within the lawsuit that many of the carrier defendants have notified the retailer they have already sought, or intend to seek, payment from the company.
But Ikea argues that Convoy’s own carrier service agreement guaranteed that the freight broker would pay carriers regardless of whether the retailer ever paid Convoy.
“In exchange for this guarantee of payment, you shall not invoice or otherwise attempt to collect any amounts related to services provided with respect to any shipment from any shipper or any other third party;” the suit cited. “Carrier shall look solely to Convoy for payment of freight charges hereunder. You hereby waive any right you may otherwise have to proceed or commence any action against any shipper for the collection of any freight bills arising out of transportation services hereunder.”
As for Hercules Capital, the hedge fund contributed $100 million out of the $260 million funding round that brought Convoy to a $3.8 billion valuation in April 2022. The company’s financing agreement gave Hercules an interest in the trucking marketplace’s assets, including accounts receivables. So when Convoy defaulted on that agreement, Hercules foreclosed the assets and tried to invoice Ikea for the $519,254 in transport services, claiming the retailer owes that amount to the estate of Convoy and the hedge fund.
“Since Convoy and Hercules have failed and/or refused to remit payment to the carrier defendants, Ikea has no obligation to remit payment to Convoy or Hercules and, therefore, neither Convoy nor Hercules presently possess any accounts receivable with respect to Ikea,” the retailer alleges.
With that in mind, Ikea said the conflict gave the home furnishings business no other choice but to place the funds in the court’s registry to determine the rightful owner.
“Ikea has a reasonable fear of multiple liability because of these adverse claims,” the retailer said. “Ikea is unsure which claimant is entitled to the property or to portions of the property.”
Whatever occurs in the case is independent of the Convoy platform itself, which is again accessible to shippers and carriers. Flexport resurrected Convoy in February, months after it first acquired the tech stack from the defunct business.
The day after the relaunch, Flexport CEO Ryan Petersen said on X that the platform’s return was “a home run in the first inning.”
“We brought back some of the biggest customers and on our first day live we successfully dispatched almost 200 full truck loads to our driver network for them,” Petersen said.
