The Great Freight Recession, which has hampered many trucking and logistics companies since around March 2022, has forced many shipping companies to file for bankruptcy to restructure their debts, sell assets, or sometimes permanently shut down operations.
Debtors have blamed their financial problems on a bad economy, low freight rates, rising costs, and fallout from the Covid-19 pandemic, which created a glut of trucks and drivers in the U.S.
💸💰 Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💸
Major trucking and shipping services company KAL Freight on Dec. 5 filed for Chapter 11 protection to wind down failing affiliates and restructure its primary business after finding itself overleveraged and unable to meet its financial obligations.
Related: Huge healthcare provider files for Chapter 11 bankruptcy
The debtor had difficulty generating sufficient business as the commercial transportation industry entered a pronounced downturn after the Covid-19 pandemic, facing a glut of trucks and drivers in the U.S.
Also unable to meet its financial obligations was Miami, Fla.-based Star Transportation PA and five affiliates that filed for Chapter 11 bankruptcy on Nov. 1 to reorganize their businesses.
The move came after one of the company’s lenders issued an order to repossess 47 of its trucks for which it had provided financing. Â
Financial distress was even worse for defunct Illinois shipping company Mighty Move Transportation, which operated with 70 power units and 75 drivers. The trucking company on Oct. 24 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Northern District of Illinois, facing two breach of contract lawsuits.
Certain companies have also been forced into filing for bankruptcy over disputes that resulted in arbitration cases.
Wynne Transportation filed for Chapter 11 bankruptcy to restructure its debts.
Image source: Shutterstock
Wynne Transportation files for bankruptcy after losing arbitration
Troubled trucking company Wynne Transportation Holdings filed for Chapter 11 bankruptcy seeking to restructure its debts after losing an arbitration judgment that awarded over $32 million to a transportation services subcontractor, Getz Transport Solutions.
More bankruptcy:
Popular bankrupt restaurant chain unloads successful locationsFormerly bankrupt burger chain rescued by fast-food rivalFormer bankrupt craft beer chain adds locations after closings
The debtor on Jan. 10 filed its petition in the U.S. Bankruptcy Court for the District of Delaware, listing $10 million to $50 million in assets and liabilities.Â
The company listed over $27 million in assets and over $44 million in debts, according to a declaration by its Chief Restructuring Officer M. Benjamin Jones of Ankura Consulting Group.
Aside from Getz, the debtor’s largest unsecured creditors include Whitley Penn, owed over $259,000; Carolina Casualty Insurance Co., owed over $215,000; and Sumitomo Mitsui Finance & Leasing Co., owed over $170,000.
An arbitrator on Oct. 15, 2024, had awarded over $32 million in damages to Getz after Wynne on Jan. 23, 2023, terminated a subcontractor agreement with Getz.
Related: Popular restaurant chain franchisee files Chapter 11 bankruptcy
A Harris County, Texas, court subsequently on Dec. 12 had ruled in favor of a Getz turnover relief action related to the arbitration award, requiring Wynne to turn over all cash to Harris County, turn over all claims and causes of action against the debtor to Getz, and prevented Wynne from selling assets outside the ordinary course of business until the award is satisfied.
A hearing was scheduled for Jan. 13, but under bankruptcy rules, all litigation against Wynne is subject to an automatic stay while the bankruptcy case proceeds.
The Dallas-based debtor filed its case to restructure its business and preserve it as a going concern, according to court papers.
Wynne seeks $5 million in DIP financing
Wynne’s majority equity holder Gemini Investors IV, which holds 90% ownership in the company, agreed to provide $5 million in debtor-in-possession financing to the debtor to finance the Chapter 11 case and stabilize its business while the case proceeds.
Wynne Transportation, established in 2019, operates facilities in Texas, Pennsylvania, Louisiana, Wyoming, and Nevada, providing turnkey ground transportation for industries, such as liquid natural gas, clean energy, petrochemical, mining, and traditional oil and gas projects.
The company’s trucking fleet consists of 315 vehicles, including 178 owned and 137 leased trucks. The debtor has generated annual revenue of about $78 million and Ebitda of $17 million from 2021 to 2023, according to the declaration.
Related: Veteran fund manager delivers alarming S&P 500 forecast
