A MAJOR transportation services company has filed for Chapter 11 bankruptcy after 39 years in business.
Wynne Transportation made the decision due to its insurmountable debt and another issue that heavily impacted the company.
Texas-based Wynne Transportation Holdings, LLC, was founded in 1986 as a specialty vehicle lease management company serving the ground transportation industry.
The company filed for bankruptcy protection in Delaware on January 10, per a declaration by Chief Restructuring Officer M. Benjamin Jones filed on Monday.
One of the cited reasons for Wynne Transportation’s bankruptcy filing was a $32.8 million arbitration judgment.
The company was ordered to pay millions of dollars in damages to GETZ Transport Solutions, LLC, a former subcontractor, following a partnership dispute.
Beyond the over $32 million owed to GETZ, Wynne Transportation faced additional litigation costs.
To further add to the company’s financial strain, two major contracts scheduled for late 2024 were postponed to early 2025.
“These setbacks, particularly the contract delays, have drastically affected our business operations and short-term liquidity,” said Jones.
The CRO added that Wynne Transportation would receive a $1 million loan to sustain its operations leading up to the bankruptcy filing, providing the support necessary to later access debtor-in-possession financing.
FINANCE FIGHT
The financial strain from the millions of dollars in fees owed to GETZ and the postponed contracts ultimately pushed Wynne Transportation’s bankruptcy filing.
The company’s partnership dispute with subcontractor GETZ centered on disagreements over a government contract in 2020.
Under the contract terms, the two companies agreed to provide transportation services during emergencies and split the profits, with 55% to Wynne Transportation and 45% to GETZ.
Issues arose in 2021 when Texas Governor Greg Abbott launched Operation Lone Star, a multibillion-dollar initiative to address border crossing concerns at the state’s southern border.
Wynne Transportation and GETZ were called on to provide emergency bus transportation services, but the former company unilaterally terminated its partnership with GETZ nearly two years early after failed negotiations to adjust their profit split.
Wynne Transportation profited tens of millions of dollars by providing transportation for over 100,000 volunteer migrants to sanctuary cities across the US while GETZ was left empty-handed.
The company, however, walked away with $32.8 million in damages after an arbitrator ruled last July that Wynne Transportation had ended the contract early without cause.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can't repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
The arbitration judgment, legal fees, and delayed contracts all put financial pressure on Wynne Transportation, draining its revenue streams.
According to Chief Restructuring Officer Jones, the company’s bankruptcy filing was crucial for addressing its financial challenges and securing long-term stability.
The Chapter 11 filing will permit Wynne Transportation to reorganize its operations, such as restructuring its debts and renegotiating contracts.
Read other bankruptcy stories from The U.S. Sun.
JoAnn filed for bankruptcy for the second time in one year as the CEO admitted the chain has faced “significant” challenges.
Plus, the Big Lots CEO revealed that its going-out-of-business process could “be reversed” as the bankrupt chain may get a second chance.
GettyWynne Transportation filed for bankruptcy due to an arbitration judgment, legal fees, and delayed contracts[/caption] Read More Details
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