DRF Logistics CH11

[RPM 26315]

 

https://www.thestreet.com/retail/huge-shipping-company-files-chapter-11-bankruptcy-to-liquidate

Leading trucking companies J.B. Hunt Transport Services  (JBHT)  and Knight-Swift Transport Services  (KNX)  recently had disappointing earnings reports after facing weaker demand for their services this year as inflation discouraged spending on new goods

Several trucking and shipping companies have been forced to file Chapter 11 bankruptcy this year, and some have filed Chapter 7 to liquidate. In one case, a company is sort of doing both, filing Chapter 11 and liquidating.

Pitney Bowes affiliate files Chapter 11 bankruptcy to liquidate
Global e-commerce shipping company DRF Logistics on Aug. 8 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas in Houston seeking to wind-down and liquidate its business.

The debtor will also seek a sale of substantially all of its assets and to provide distributions to its stakeholders, according to a declaration from the company's Chief Restructuring Officer Eric Kaup of Hilco Global.

The debtor listed $100 million to $500 million in assets and liabilities in its petition. Its largest unsecured creditors include Priority Express Courier, owed $2.3 million; Spot Freight, owed $2.1 million; and XPO Express, owed $1.7 million.

The Austin, Texas-based debtor was previously an indirect subsidiary of Pitney Bowes Inc.  (PBI)  after the global shipping company acquired the company's predecessor Newgistics in 2017. Since purchasing the company, the debtor has reported significant losses each year caused by sizeable overcapacity which forced reduced pricing on volume.

Because of fixed costs it incurred in a buildout of its shipping network, the debtor sought to maintain volume by offering discounts and working with clients with lighter weight volume deeper into its network, which reduced its overall revenue per piece.

Pitney Bowes funded the debtor's annual losses, which averaged about $97 million a year since 2019, but began a strategic review of the debtor's global e-commerce business in early 2023. The company unsuccessfully sought a sale of the debtor as a going concern and instead considered an out-of-court wind-down of the company or potential Chapter 11 bankruptcy filing.

To enable the debtor to file Chapter 11, Pitney Bowes divested of majority voting rights of the debtor, handing 81% voting interest to a Hilco Global affiliate, while maintaining 19% voting rights and 100% economic interests in DRF Logistics. The debtor arranged secured debt amendments to release it from about $1 billion in secured debt to allow for the bankruptcy filing to commence. 

A day after the Chapter 11 filing, the debtor filed a restructuring support agreement that calls for an orderly wind-down of DRF's business in a plan of liquidation.

[texashorne 1177]

Too much capacity generated from the Covid boom. Now there's way to many trucks per load nationwide and the rates have yet to bottom out as indicated by these filings.. 

Another this week..

https://www.freightwaves.com/news/pride-group-closing-could-affect-freight-rates-driver-market

 

[Captainant 27617]

48 minutes ago, texashorne said:

Too much capacity generated from the Covid boom. Now there's way to many trucks per load nationwide and the rates have yet to bottom out as indicated by these filings.. 

Another this week..

https://www.freightwaves.com/news/pride-group-closing-could-affect-freight-rates-driver-market

I think it's that, plus interest rates going up (from the COVID baseline) is really going to amp up driver loan delinquency rates. Those guys already had a hard time keeping their trucks when loans were damn near free, I can't imagine that it's easier now to be a truck operator, which puts even more strain on the trucking companies

Edited August 16 by Captainant

[texashorne 1177]

1 hour ago, Captainant said:

I think it's that, plus interest rates going up (from the COVID baseline) is really going to amp up driver loan delinquency rates. Those guys already had a hard time keeping their trucks when loans were damn near free, I can't imagine that it's easier now to be a truck operator, which puts even more strain on the trucking companies

Its horrible with inflation too. National rates are the same or worse as 2019, but in 2019 inflation was significantly less. 

There's also zombie trucks.. these guys stopped paying on their loan and the banks are not repossessing the trucks, so they can run at even cheaper rates because they don't have a truck payment.   Something has to give, I'm just not sure when. 

[Incredulity 11643]

9 hours ago, texashorne said:

There's also zombie trucks.. these guys stopped paying on their loan and the banks are not repossessing the trucks, so they can run at even cheaper rates because they don't have a truck payment.   Something has to give, I'm just not sure when. 

Syncs with Commercial RE.  
 

add those to underwater bond positions of the majority of mid-market banks and I can get 

 

 

no one seems to GAF