Gainey Transportation, Grand Rapids, Mich., has filed for Chapter 11 bankruptcy protection in response to a lawsuit by Wachovia.
Chapter 11 is designed to allow a business operate while developing a reorganization plan and keeping creditors at bay.
According to published reports, in late September, Wachovia filed a $238 million lawsuit against Gainey Corp., requesting the court appoint a receiver to take over the 2,300-employee firm.
According to The Grand Rapids Press, in July, company owner Harvey Gainey told the paper that the company was not in trouble and was growing as smaller industry players closed amid high fuel costs and a slow economy.
In a statement on the company's Web site, Gainey said, "the nation's financial crisis has compelled our lenders, including Wachovia Bank, to make ill-advised decisions based on their own cash constraints. Those constraints have placed Gainey Corp. and its operating companies in a very difficult situation.
"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.
"Faced with recent actions by Wachovia Bank, the company has decided that the only reasonable course that will allow us to serve our customers and preserve jobs is a Chapter 11 reorganization filing. Our sound business fundamentals - which include positive cash flow and operating income - will continue to ensure our uninterrupted operations, including paying all suppliers, delivering all freight and meeting our payroll."
The privately held company, which reportedly has annual revenue of more than $400 million, is ranked No. 64 in the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.
Chapter 11 is designed to allow a business operate while developing a reorganization plan and keeping creditors at bay.
According to published reports, in late September, Wachovia filed a $238 million lawsuit against Gainey Corp., requesting the court appoint a receiver to take over the 2,300-employee firm.
According to The Grand Rapids Press, in July, company owner Harvey Gainey told the paper that the company was not in trouble and was growing as smaller industry players closed amid high fuel costs and a slow economy.
In a statement on the company's Web site, Gainey said, "the nation's financial crisis has compelled our lenders, including Wachovia Bank, to make ill-advised decisions based on their own cash constraints. Those constraints have placed Gainey Corp. and its operating companies in a very difficult situation.
"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.
"Faced with recent actions by Wachovia Bank, the company has decided that the only reasonable course that will allow us to serve our customers and preserve jobs is a Chapter 11 reorganization filing. Our sound business fundamentals - which include positive cash flow and operating income - will continue to ensure our uninterrupted operations, including paying all suppliers, delivering all freight and meeting our payroll."
The privately held company, which reportedly has annual revenue of more than $400 million, is ranked No. 64 in the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.
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