Private Equity Firm to Buy Gainey

November 17, 2009

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Gainey Transportation, which filed for Chapter 11 bankruptcy reorganization more than a year ago, is being purchased by a private equity firm.

According to published reports, Minnesota-based Wayzata Capital will pay $77.8 million for the Michigan-based company. The deal was approved by the bankruptcy judge Nov. 17.

Gainey filed for bankruptcy protection in October 2008 facing a more than $240 million in debt and pressure from lenders, especially Wachovia Bank. At the time of the bankruptcy filing, company owner Harvey Gainey blamed the nation's financial crisis for forcing its lenders, including Wachovia, "to make ill-advised decisions based on their own cash constraints ... our exhaustive efforts to negotiate a constructive agreement with our lending group have been met with a series of increasingly aggressive actions by these lenders."

There were also allegations of mismanagement by Wachovia and others, with questions raised about Harvey Gainey's salary, payments to lease an aircraft he owns, and real estate arrangements between the trucking company and the owner.

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