Gainey Corp., Grand Rapids, Mich., might escape bankruptcy if creditors accept a reorganization plan, which would involve receiving 40 cents on the dollar,
according to the Grand Rapids Press. Creditors and a bankruptcy judge will be discussing the proposal in U.S. Bankruptcy Court starting July 6.
In October of last year, the company filed for Chapter 11 bankruptcy protection after being sued by lender Wachovia, owing more than $242 million to creditors.
Under the reorganization plan, rather than outright liquidating the company's assets, Gainey would liquidate its trucks and trailers over 12 to 18 months, while at the same time giving possession of its accounts receivable to creditors.
Harvey Gainey, founder and chief executive of the company, has taken on a new investor, which he declined to name, allowing for a new company to be established. The new company, referred to as "Newco" in court documents, would lease Gainey Corp.'s old trucks and trailers. Creditors would get any money made off the leases as well as profits from selling off the trucks and trailers. The new company would buy or lease additional rolling stock and could make offers on its old assets during liquidation.
About 1,700 people are expected to keep their jobs, and creditors would receive about $100 million of the $242 million they are owed.
Gainey told the Grand Rapids Press that he's positive about the plan and believes creditors will be open to it.
according to the Grand Rapids Press. Creditors and a bankruptcy judge will be discussing the proposal in U.S. Bankruptcy Court starting July 6.
In October of last year, the company filed for Chapter 11 bankruptcy protection after being sued by lender Wachovia, owing more than $242 million to creditors.
Under the reorganization plan, rather than outright liquidating the company's assets, Gainey would liquidate its trucks and trailers over 12 to 18 months, while at the same time giving possession of its accounts receivable to creditors.
Harvey Gainey, founder and chief executive of the company, has taken on a new investor, which he declined to name, allowing for a new company to be established. The new company, referred to as "Newco" in court documents, would lease Gainey Corp.'s old trucks and trailers. Creditors would get any money made off the leases as well as profits from selling off the trucks and trailers. The new company would buy or lease additional rolling stock and could make offers on its old assets during liquidation.
About 1,700 people are expected to keep their jobs, and creditors would receive about $100 million of the $242 million they are owed.
Gainey told the Grand Rapids Press that he's positive about the plan and believes creditors will be open to it.
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