Vehicle transporter Allied back in bankruptcy
Allied Systems Holdings Inc. is back in Chapter 11 bankruptcy.
The Decatur, Ga., vehicle transporter and 18 subsidiaries entered into bankruptcy protection on Sunday after some lenders last month submitted an involuntary Chapter 11 petition against the company.
Allied said the restructuring would not interrupt its business operations.
It is seeking court approval for $20 million in debtor-in-possession financing from its majority financer.
"Chapter 11 allows us to move forward with our planned improvements in operations and systems and allows us to achieve our restructuring objectives in a controlled, orderly and timely manner," Allied CEO Mark Gendregske said in a statement.
The company filed for Chapter 11 bankruptcy in July 2005. It emerged from court protection in May 2007. Allied blamed its ongoing financial troubles on lagging auto production and sales resulting from the recent downturn.
Allied and its majority lender, private-equity firm Yucaipa, have been in litigation with some of its minority lenders since 2009, the company said.
Yucaipa is run by the billionaire Ronald Burkle. It owns a 63 percent Allied stake as a result of the earlier bankruptcy, from which Allied emerged in May 2007, court papers show.
Allied said its revenue totaled $343 million in 2011, down 37 percent from a year earlier, and down 58 percent from 2007, which was prior to the global financial crisis.
On May 17, three lenders filed involuntary Chapter 11 petitions against Allied, four months after having sued Yucaipa in a New York state court.
The lenders Black Diamond CLO 2005-1 Ltd, BDCM Opportunity Fund II LP and Spectrum Investment Partners LP blamed Yucaipa for intentionally causing Allied to default, in order to prevent them from being repaid and exercising other rights.
Allied said it recently had $274 million of principal outstanding under various credit agreements.
"In light of the involuntary bankruptcy cases and its financial condition, Allied determined that it would be in the best interests of (its) estates to proceed under Chapter 11," Allied Chief Financial Officer Scott Macaulay said in a Monday court filing.
Allied said it has about 1,835 employees. Allied said it also intends to seek recognition in Canada of the Chapter 11 cases.
Burkle recently divested much of his stake in Barnes & Noble Inc. after a failed proxy fight to win board seats.
Reuters contributed to this report.
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