After helping a trucking company avert a Chapter 11 filing related to a personal injury litigation action, CFGI continued to support the business’s ongoing refinancing efforts.
- 3 weeks before a potential Chapter 11 filing, CFGI was brought onboard.
- The issue was settled during remediation, averting the need for a Chapter 11 filing.
- CFGI continued to assist the client with refinancing options.
Tough times in the transportation services sector coincided with high legal fees that had piled up over three years as a jury trial approached. At first, bankruptcy seemed to be the only way forward for a CFGI client, despite the potentially significant downsides. As we generated the necessary financial information to support this company as it prepared for its Chapter 11 filing, the forecasts we created helped demonstrate to the plaintiff the benefits of a consensual settlement, rendering the bankruptcy proceeding unnecessary.
In this situation, our client was a supply chain services company that shared its branding with other associated businesses. Though our client was operationally distinct from these other entities, the organization was interlinked, meaning the fate of one would certainly impact outcomes for all others.
As the trial date approached, Chapter 11 seemed to be the only possible option
A commercial trucking business was named as a defendant in a personal injury litigation that had begun to advance toward a jury trial after three years of legal proceedings. The damages claimed by the plaintiff exceeded the company’s insurance coverage, raising doubts about how the business would be able to afford the outcome.
In addition to the damages named in the case, the company had begun to face issues due to its rising legal costs. The expenses that had been incurred to defend the litigation were growing larger, and they were beginning to drain liquidity while putting further pressure on other available resources.
Revenue generation during this period had also been a problem that contributed to the business’s overall financial woes. A poor year in the freight market and increased insurance premiums contributed to the company’s operating losses.
The business found itself in a difficult position. The company was unable to settle the litigation, and with a trial imminent, it seemed that the only alternative was to file a Chapter 11 proceeding.
Such an action would have cast a dark shadow over the company’s affiliated businesses, which remained viable. Since the other organizations carried the same branding, if the trucking company were to complete a Chapter 11 filing, the reputation of these associated businesses could have also taken a hit.
While the filing that was being contemplated had been planned in such a way that current equity holders would have the opportunity to serve as a purchaser, the move was not without its risks. The process would carry a significant additional cost while also affecting the brand’s position in the business community and adversely impacting the entirety of business operations.