According to an article in American Shipper, Greatwide Logistics will allow itself to be sold to the original lien holders. Apparently some hedge funds have bought into this trucking broker.
This part of the article is interesting:
"Dallas-based Greatwide is the third-largest, non-asset-based trucking company in the United States, with annual revenue of about $1.2 billion and major customers such as Wal-Mart, Target and IBM. Its business model relies on using independent agents rather than owning its own trucks to move freight.
The move essentially means that two hedge funds holding Greatwide’s primary debt, Centerbridge Capital Partners and D.E. Shaw, forced out private owner Investcorp and will now have the first opportunity to own the company."
First off, a non-asset-based trucking company is a truck broker. They just match loads with trucks, bill the customer, pay the trucker, and take some money for themselves. The problem is there isn't much margin. When times are good they can do really well, but if they don't watch the pennies, things can turn ugly fast (which apparently is what happened).
I love this quote from the company.
"Chief Executive Raymond B. Greer said in a statement. “Greatwide’s fundamentals are solid. We believe the proposed transaction is a prudent and necessary step to significantly reduce our debt and interest burden in order to enhance our flexibility to continue to invest and grow.”
I hope the companies using Greatwide know they will responsible to pay the truckers if Greatwide doesn't. Probably not. It's been some time since bankruptcies like this, which forces everyone to read the rule book. Only us old folks know from experience how this goes. But then, all of these truckers are small independents, and unless someone is helping them go after their money, they will probably be the ones who get stiffed.