Client Profile
The Company was a publicly traded logistics and transportation provider serving industrial, commercial and consumer customers throughout North America. Following several quarters of declining freight volumes, higher fuel and labour costs, and rising interest expense placed significant pressure on profitability and liquidity. The Company had approximately $185 million of funded debt, substantial lease obligations and limited liquidity. Covenant breaches and near-term maturities created significant refinancing risk, while declining operating performance reduced the Company's access to traditional capital markets. Management and the Board concluded that a comprehensive restructuring was required to preserve the enterprise and maximize value for stakeholders.
Key Challenges
- Approximately $185 million of funded debt against declining EBITDA
- Significant near-term debt maturities
- Breaches of financial covenants
- Reduced freight volumes and pricing pressure
- Elevated fuel, labour and maintenance costs
- Excess fleet and underutilized operating capacity
- Significant lease and contractual obligations
- Limited access to conventional refinancing
- Declining public-market confidence and share price
- Risk of value-destructive asset sales or liquidation
Our Mandate
A comprehensive Chapter 11 restructuring and balance sheet recapitalization to stabilize the Company, reduce leverage and preserve its operating platform.
- Chapter 11 Filing & DIP Financing
- Operational Restructuring
- Balance Sheet Restructuring
- Stakeholder Communications
- Debt-for-Equity Recapitalization
- Emergence & Reorganization
Results
- $115 million reduction in outstanding debt
- $35 million of new capital secured for the reorganized company
- $14 million annual reduction in cash interest expense
- Significant reduction in excess fleet and operating capacity
- Closure or consolidation of underperforming facilities
- Improved operating margins and cash-flow generation
- Preservation of the Company's core customer relationships
- Successful emergence from Chapter 11
- Repositioning of the Company for sustainable long-term growth
Client Outcomes
A highly leveraged public transportation company with declining liquidity successfully utilized the Chapter 11 process to stabilize operations, restructure its balance sheet and preserve substantial enterprise value. The combination of Chapter 11 protection, DIP financing, operational restructuring, creditor negotiations and a debt-for-equity recapitalization transformed the Company's capital structure and provided the reorganized business with the liquidity and financial flexibility required to compete effectively in a challenging transportation market.
RCP engagements are tailored to the facts, stakeholders and objectives of each situation.
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