Freight trucking companies have faced an industry recession since 2022 with declining demand, high interest rates and inflation leading to financial distress, bankruptcies and business closings.
The fallout from the trucking recession has led several logistics companies to file Chapter 11 to reorganize their businesses, or in the most severe situations, file Chapter 7 to liquidate.
Related: Huge shipping company files Chapter 11 bankruptcy to liquidate
Some of the recent bankruptcy filings have included Cinnaminson, N.J.-based Fastline Cargo, which operates as FLC. The debtor on July 29 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in Camden, N.J., seeking to reorganize its business after facing financial distress.
Another troubled firm was Austin, Texas-based global e-commerce shipping company DRF Logistics, which filed for Chapter 11 bankruptcy on Aug. 8 in the Southern District of Texas seeking to wind-down and liquidate its business after reporting annual losses every year since being acquired by Pitney Bowes in 2017.
Shutterstock
Pride Group will either sell or liquidate
Huge shipping company Pride Group Holdings' bankruptcy case has been taking several months to conclude. The debtor filed for protection on March 27, 2024, under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada blaming effects from the Covid-19 pandemic for the company's financial crisis.
The Mississauga, Ontario-based company subsequently filed for Chapter 15 bankruptcy protection on April 1 in the U.S. Bankruptcy Court for the District of Delaware seeking recognition of a foreign proceeding to protect its assets in the U.S. from creditors.
In a declaration by its foreign representative, Pride said that, as the pandemic subsided, demand for trucking services decreased, diesel fuel prices soared, interest rates rose, and an oversupply of trucks and truck drivers in North America negatively impacted the trucking industry.
Related: Another distressed trucking company files Chapter 11 bankruptcy
When it filed bankruptcy, Pride Group had a fleet of about 20,000 tractor-trailers owned, leased, contracted for service, serviced or securitized and operates 50 owned and leased locations across Canada and the U.S., FreightWaves reported.
In CCAA monitor Ernst & Young's Twelfth Monitor Report, it stated as of Aug. 6 that Pride Group's fleet consisted of 1,459 trucks and trailers, 1,383 owned by the debtor. At that time, it employed about 110 office staff and 95 drivers. It also had 120 driver subcontractors through agencies, about 140 owner-operator drivers and 75 drivers through four partner carriers.
In the Thirteenth Monitor Report filed on Aug. 8, it wrote that it does not view a going concern restructuring plan as a feasible option for Pride because of lack of stakeholder support.
More bankruptcy:
- Distressed pizza chain plans to file for Chapter 11 bankruptcy
- NASCAR team’s troubles worsen in Chapter 11 bankruptcy
- Distressed grocery brand files for Chapter 11 bankruptcy
The monitor wrote the debtor had not received approval of a restructuring plan in its CCAA proceeding by July 15, 2024, and the debtor's $36.3 million debtor-in-possession facility matured on July 31 and was fully drawn.
Pride and the debtor's chief restructuring officer intend to move forward with a centralized, coordinated and controlled disposition and wind-up of Pride's assets, the report said. The CRO also seeks to move forward with a going-concern sale or wind-down of Pride Group.
Members of the Sulakhan Johal family submitted the winning going concern bid of $56.1 million among three bids in a sale process, according to Aug. 6 "Twelfth Report of the Monitor" in the debtor's CCAA proceedings. Johal founded the company in 2010.
However, Pride's stakeholders have reportedly rejected that sale offer, and the debtor on Aug. 7 filed a CCAA motion seeking an additional $50 million in DIP financing to finance an orderly wind-down of its operations, according to court papers.
Pride Group, however, in an Aug. 15 statement claimed it has sufficient liquidity to operate and continues to seek a going-concern sale of the company. It said, as of the date of the statement, the company was not being wound down.
Related: Veteran fund manager sees world of pain coming for stocks
