Chapter 11 Used to Downsize Company

Challenge

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Dry van and refrigerated truck load carrier. $300 million in Sales. $150 million in Bank Debt.

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• High cost of acquiring 13 companies caused a drain on liquidity.
• Projected cost savings did not materialize as recession caused drop in revenue and profitability.
• Senior management was not analyzing operations or reacting to the market during roll-up of purchased companies.
• Company undercapitalized and losing money on a daily basis.
• Poor economy, poor integration of acquired companies and increased insurance premiums due to poor safety record forced company into bankruptcy.
• High dead head percent and underutilization of equipment was causing a drain.

Solution

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• MorrisAnderson engaged as Financial and Reorganization Advisor in a Chapter 11 proceeding.
• 13 roll-up companies were still operating independently with no consistency or oversight.
• Equipment was not being maintained and not being replaced.
• Sales and marketing were operating independently of operating strategy.
• No safety strategy.

Results

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• Replaced senior management with operations focused management team.
• Instituted new sales initiatives to align with company goals.
• Divested two rolled up companies that were not strategic fits.
• Instituted company-wide safety program that decreased losses by 30%.
• Required quarterly on-site preventative maintenance for all equipment.
• Began equipment replacement program to decrease average age of tractors from 3.5 years to 2 years.
• Returned 25% of all equipment to leasing company.
• Facilitated successful Plan of Reorganization from a Chapter 11.