Chapter 11 Used to Downsize Company
Transit Group, Inc. (Priority Transportation), Orlando FL
Dry van and refrigerated truck load carrier. $300 million in Sales. $150 million in Bank Debt.
- 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.
- 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.
- 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.