Having filed Chapter 15 bankruptcy in March and recently having been denied a reorganization of the company by a bankruptcy monitor, Canada-based transportation company Pride Group will be broken up with its assets sold off to pay creditors.
Company stakeholders refused a $56.2 million buyback of part of the company by the Johal family, who founded and ran the company in 2010. The company reportedly owed lenders $637 million. The bankruptcy is being handled by monitor Ernst & Young.
In a recent court filing, Ernst & Young wrote, “Given the feedback it has received to date, the monitor no longer views a…restructuring plan as a feasible option given the lack of stakeholder support for it. “The Pride entities…[intend] to continue to move forward with a going concern sale or wind-down of the Pride Group Logistics entities.”
Analysts predict the liquidation of one of Canada’s largest trucking, logistics, and sales companies could be felt across the trucking industry. The group controlled more than 20,000 trucks throughout Canada and the U.S.
Analysts further predict the process of winding down Pride Group’s operations should help to increase freight prices as the industry begins to cycle out of a severe downturn. Pride Group had been quite aggressive in bidding down rates to increase its business.
Among Pride Group’s lenders were Daimler Truck Financial Canada, Mitsubishi HC Capital America, Daimler U.S., Paccar Financial, and Volvo Financial Services Canada. Mitsubishi was the first company to file a lawsuit against Pride Group concerning a $100 million loan that had gone unpaid. 20 more lenders followed suit.
The Mississauga, Ontario-based company was originally founded by the Johal brothers, CEO Sulakhan “Sam” Johal and Vice President Jasvir Johal. It has operated cross-border services between the U.S. and Canada. It also operated truck sales dealerships in both nations. The company had benefited from high spot rates during the pandemic, but in recent years has hemorrhaged revenue.
The company continues to operate more than 1,000 trucks and employ over 900 workers, including drivers and office staff. As the company’s operation winds down, these drivers will be laid off. Dealerships are currently in the process of selling off assets, and reports indicate that trucks and trailers are often selling for less than market value.
In March, when the company filed for bankruptcy, Sulakhan Johal warned that an “unorganized demise” of Pride Group would harm “the livelihoods of thousands of families.”
In its bankruptcy filing with Ontario Superior Court, Pride Group said, “Increased spot freight prices, and low diesel prices and interest rates during the pandemic led to an increase in trucking and logistics supply. This ultimately resulted in an oversupply of trucking and logistic services which resulted in declining spot freight prices while diesel prices and interest rates went back up.”
The filing continued, “This simultaneous reduction in pricing and increase in costs negatively impacted the Pride Group’s revenue, while also decreasing the demand for truck sales because the industry was no longer viewed as a good investment for the new owner-operators that form the foundation of the Pride Group’s customer base.”
