Wind Down of Multi-State Trucker in Chapter 11 Pays Lenders 100%

Challenge

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Trucking company (LTL) with locations across the East Coast. $200 million sales. $60 million debt.

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• Fuel surcharges could not keep up with quickly rising fuel prices, lag time cost over $3 million in a single month
• Rolling stock was scattered across the country
• PE sponsor firm not willing to fund capital and bank group not willing to fund losses
• Increased competition, especially from the former owner and rising fuel prices, caused extreme pressure on margins.
• Combined with a recent purchase by a Private Equity firm, who highly levered the company, a liquidity crisis occurred.
• The bank group had concern over the value of the collateral and did not wish to continue to fund losses.

Solution

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• MorrisAnderson worked with management to develop a restructuring plan.
• With losses mounting, the company determined that liquidation was the only option and the company filed for Bankruptcy.
• MorrisAnderson and the company worked with employees to insure delivery of product and return of all rolling stock equipment.
• By guaranteeing wages and most outstanding health care payments, product was delivered and equipment returned.

Results

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• The orderly wind down resulted in 100% of all equipment returned.
• The auctions were highly successful, resulting in the secured creditors being paid 100%.
• Negotiated and settled L/C for Worker’s Comp and Liability for $750K increase in cash to the company.
• Final resolution of bankruptcy case became a famous Supreme Court case regarding the use of the Absolute Priority Rule.