Monday, July 15, 2024

When abruptly shuttered its operations in the summer and filed for bankruptcy protection, few thought that a buyer would emerge and try to revive the long-troubled trucking giant. But a prominent trucking executive has assembled a last-minute plan to acquire out of bankruptcy — a proposal that seeks not only to rehire many of the company’s employees but also to work with their union, the , to create a healthy business. The plan rests, however, on getting the to allow to postpone repayment of a $700 million rescue loan that it made to the company in 2020. But the Treasury may not accept the plan because there are legal obstacles to extending the loan. And, it stands to be repaid sooner under the plan that has already filed in the Delaware bankruptcy court, which involves selling the company’s terminals and other assets to raise hundreds of millions of dollars in cash. Some trucking analysts say reviving will be hard because many of its customers will have moved on to other trucking companies that are much better run than the old . But , the trucking executive leading the deal, said only her plan could bring back thousands of jobs, adding that she had the experience to build a leaner company in partnership with the Teamsters and assemble an executive team that can win back customers. “Restructuring provides an opportunity to bring back tens of thousands of fair-wage, union truck-driving jobs while bolstering America’s supply chain,” said Ms. Riggs Amico, the executive chairwoman of , a private auto-hauling trucking company. “Who wouldn’t find that a worthy effort?” Under the proposal, Ms. Riggs Amico’s group would extend the loan so that it would be repaid in 2026 instead of next year, according to a person familiar with the bid. The group would also borrow $1.1 billion to pay off other secured creditors and bankruptcy lenders and provide the new company with cash to operate. And it would issue $1.5 billion of preferred shares to unsecured creditors — the biggest of which is the — that don’t get all their claims paid in bankruptcy. The would get some $500 million of the preferred shares, according to the plan, far less than the $4.8 billion that owes it. Ms. Riggs Amico’s bid will be submitted to the bankruptcy court on Tuesday, when an auction to sell ’s assets will take place. Ms. Riggs Amico and other female executives would own 51 percent of the new company, which would be separate from . The new plans to employ some 15,000 people, according to the person familiar with the plan, down from 30,000 earlier this year. “The Teamsters have a framework agreement to lay the foundation for good union jobs, fair wages, and strong benefits once a new company is in place,” Kara Deniz, a Teamsters spokeswoman, said in a statement. Government labor market data suggest that roughly 10,000 employees have found jobs elsewhere, said , vice president of trucking at , a forecasting firm that focuses on the freight industry. That implies that some 20,000 employees are still looking for work. “I have a lot of friends that are still without jobs,” said , a former driver from McDonough, Ga., who found a job at another trucking company. “I have a lot of friends that are on the verge of losing their house.” Though bringing back lost trucking jobs and resurrecting a unionized company may appear attractive goals to the labor-friendly administration, the Treasury may not believe it has the legal authority to extend the loan — it was made under the , passed to provide relief early in the pandemic — and it may have qualms about further backing a company that struggled for years. “There is no clear authority for to compromise the claim in any way that does not maximize returns for the U.S. government,” said , a law professor at who specializes in bankruptcy. In a statement, a spokesperson said, “Treasury is one of several creditors taking part in the bankruptcy process. We will continue to work to ensure taxpayers, and impacted workers and their families are treated fairly.” , the executive director of the , said on Sunday that the fund was trying to determine the financial benefit of each plan as the terms of the rescue bid changed. And he said there may be a legal obstacle: The generally prevents a pension fund from owning securities issued by companies contributing to the fund — the preferred stock under the rescue plan — though there can be exemptions. “This is a very complicated problem,” said. “We haven’t come to a conclusion, mainly because the deal keeps evolving.” Members of Congress from both parties have written to the , urging it to consider extending its loan, including , Republican of Missouri, and , Democrat of Massachusetts. Mr. Hawley this month wrote that assisting the sale of to an acquirer was “a common-sense step to keep ’s trucks on the road, and keep its work force gainfully employed.” The ’s loan came from a pot of money to help companies designated as crucial to national security. It drew scrutiny because of the links between and the administration, and because the had sued the company, accusing it of overcharging the for freight services. last year agreed to pay a $7 million fine to resolve the case. was a big player — another is — in the less-than-truckload sector, in which a truck will carry goods for more than one customer. Companies in the sector often have a network of terminals and warehouses to store goods between shipments and typically travel shorter distances than truckload companies, whose vehicles carry goods for one customer over longer distances. Analysts say underperformed because it failed to effectively integrate big acquisitions and because it had higher costs, which some attribute in part to the unionization of its work force. Ms. Riggs Amico, a primary candidate in Georgia for the U.S. Senate in 2020, has experience restructuring Teamster trucking companies. She oversaw ’s acquisition of two auto-hauling trucking companies with Teamster work forces, and her plan for envisions hiring executives who specialize in the less-than-truckload business. (, whose employees belong to the , itself filed for bankruptcy in 2019.) Some of ’s rivals are interested in snapping up its terminals under the current plan in Delaware bankruptcy court. has submitted a stalking-horse bid — an offer intended to set a minimum price for assets — of $1.53 billion for ’s shipment centers. That sum would provide enough cash to pay off the Treasury and a secured loan of around $500 million now held by , a Wall Street firm. Ms. Riggs Amico’s plan would pay off but ask the Treasury to extend its loan. Some experts say this would mean taxpayers were taking a back seat to Wall Street. “It’s helping private parties make money off of a distressed-debt investment, and there’s no real reason for to do that,” , the professor, said. declined to comment. In Congress, those open to Ms. Riggs Amico’s bid acknowledge that other creditors would be getting ahead of Treasury but think the compromise a necessary evil to save jobs. But it is not clear whether there would be much room left for a resurrected . Trucking experts say the market is gradually coping with the loss of the company, which once accounted for roughly 12 percent of drivers in the less-than-truckload sector. , the trucking analyst, said ’s exit had pushed trucking rates higher as customers scrambled to find other carriers. But he expects the sector to heal soon. “’s shutdown did not seriously disrupt the less-than-truckload market,” he said.

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