It’s been an extremely difficult year for the trucking industry. With the lack of drivers and with many companies folding, some have called it a trucking apocalypse. Unfortunately, the grim year continues as Jack Cooper Ventures announced it will be “business as usual” as the auto hauler experiences a restructure.
In fact, on Tuesday the Teamsters told its members that Jack Cooper did file Chapter 11 protection, bankruptcy in the Northern District of Georgia.
According to company officials, they would institute a “comprehensive restructuring” meant to trim its debt by more than $300 million. Furthermore, their announcement echoed earlier comments by Teamsters that almost 2,000 jobs would be kept.
The company said, “During the restructuring process, the Company will remain focused on successfully serving its customers and should emerge in an expeditious manner as a stronger business.”
As part of the restructuring, the company’s biggest lenders will cancel their debts. In return they’ll get all of the company’s assets. Specifically, the New York company, Solus Alternative Asset Management, will receive most of the assets. Jack Cooper refers to the company as “a long-time supportive lender.”
Furthermore, the lenders will give the company debtor-in-possession financing which will allow Jack Cooper to stay afloat during this time. It should be noted, that debtor-in-possession lenders are typically the first to get repaid in a bankruptcy agreement.
According to Solus Alternative Asset Management, “The new financing, combined with cash generated by the business, will support the ongoing operations, fund payment of employee salaries, wages and health benefits in the ordinary course, and ensure that suppliers are paid as usual for goods and services provided during the process.”
Lenders to the company, who will soon be the new owners, anticipate investing lots of money in Jack Cooper. This investment would include capital to replace the current equipment with new, upgraded equipment. They hope to achieve this goal within 5 years.
What do you all think? Can the industry survive with all these struggling companies?