Elliott Greenleaf Bankruptcy Alert – Comcar Industries, Inc.

Delaware Chapter 11: Comcar Industries, Inc.

Click HERE for a list of the TOP UNSECURED CREDITORS 

All Documents Can Be Accessed by Clicking the Case Title Immediately Above

CASE DETAILS

Link: Petition

On May 18, 2020 (the “Petition Date”), Comcar Industries, Inc. (“Comcar”) and thirty-one of its affiliates (collectively, the “Debtors”) each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Debtors are represented by DLA Piper LLP (US). The case has been assigned to the Honorable Laurie Selber Silverstein. A hearing on the Debtors’ first day motions was held on May 19, 2020.

ABOUT THE DEBTORS

Link: Affidavit in Support

The Debtors comprise a transportation and logistics company headquartered in Jacksonville, Florida, which offers national truck transportation services, trucking, warehousing, truck parts, and truck and trailer repairs. Founded in 1953, the Debtors were formed through the incorporation of Commercial Carrier Corporation (now known as CCC Transportation). Comcar is a holding company that provides transportation, logistics, and repair services through its group of subsidiaries and affiliates. Through a series of acquisitions in the 1980s, the Debtors expanded their offerings and Comcar became the parent company of the four-division national truck transportation services company. Currently, Comcar is one of the largest privately-owned transportation companies, with over forty strategically-located terminal and satellite locations across the country.

As of the Petition Date, the Debtors have approximately 950 employees, of which approximately 700 are drivers, with the remaining roles largely administrative. In addition, the Debtors supplement their workforce with independent contractors and temporary employees.

The Debtors have experienced a long period of financial distress and liquidity challenges. Since entry into their first credit agreement in 2014, the Debtors have carried a high debt load. In addition, the trucking industry began experiencing significant headwinds in 2019. During the first half of the year, the $800 billion American industry began to experience a recession, with a reported 640 trucking companies filing for bankruptcy. By mid-2019, the market continued to soften, with a decline in overall freight tonnage and excessive truck capacity in the market leading to a significant decline in freight rates. Compared to the year prior, 2019 showed a steady decline in freight rates, including spot freight rates and contractual rates. In addition, volumes of loads decreased for nine consecutive months in 2019. These events left a number of trucking companies in distress. In December 2019, the Debtors reported a year-over-year decrease in revenue of approximately 26% across all business units, collectively losing a total of $25 million in 2019 and $6 million through March 27, 2020. Beginning in mid-2019, the Debtors began replacing their C-suite and obtained equity infusions from their largest shareholder and prepetition term lender, but the financing proved insufficient to permit the Debtors to weather the downturn in the industry.

FINANCIAL CONDITION

As of March 27, 2020, the Debtors had total assets of approximately $66.7 million on a net book basis, and liabilities of approximately $85.6 million, consisting of $39.2 million in current liabilities and $46.3 million in long-term liabilities. The Debtors’ primary sources of liquidity and capital resources have been cash provided by operations and credit available under their long-term debt facilities. As of the Petition Date, a total of approximately $64.8 million was owed to the Debtors’ prepetition lenders under their long-term debt facilities. $45.5 million in funded debt is identified as secured in the Affidavit, with the remaining debt unspecified. In addition, over $131 million is outstanding among the Debtors’ top thirty-one unsecured creditors as listed in the Petition.

SALE PROCESS

The Debtors determined that offers received from Adams Resources & Energy, Inc. and Service Transport Company (“Adams Resources”) and P&S Acquisition, LLC (“PSL”) were the highest and best to purchase substantially all of the assets of certain business units, and they began separate arms-length negotiations for the sales. PSL agreed to purchase substantially all assets of one unit for $9 million; Adams Resources agreed to purchase substantially all assets of the other unit for $8.6 million. The Debtors signed a purchase agreement to sell a third division through a private sale, though an auction is possible if competitive offers are received.

DIP/CASH COLLATERAL MOTION

Links: DIP Motion

The Debtors have procured a commitment for up to $15 million in postpetition, debtor-in-possession financing from their prepetition lenders – Sterling National Bank and related affiliates, and B2 FIE VIII LLC – a portion of which will be used to repay part of the existing indebtedness and fees at closing; a portion of which will be used to roll-up certain prepetition term loans; and a portion of which will be used to provide the Debtors with sufficient liquidity to fund the successful administration of these cases. This financing requires approval of the sale of the aforementioned divisions within thirty days of the Petition Date so that two of the transactions can close within forty-five days and the remaining transaction can close within sixty days.

Related First Day Motion Can Be Accessed by Clicking on the Links Below

INSURANCE POLICIES MOTION

TAXES AND FEES MOTION

CRITICAL VENDORS MOTION

EMPLOYEE WAGES AND BENEFITS MOTION

TOP UNSECURED CREDITORS LIST