Cargo hauler STG Logistics files bankruptcy following debt deal litigation
Company restructuring to reduce debt by 91%
Cargo hauler STG Logistics filed for bankruptcy on Monday, following a contentious debt deal that sparked litigation by disgruntled creditors.
The company listed debt and assets in the range of $1 billion and $10 billion in court papers filed in New Jersey.
As part of its Chapter 11, the company entered into a restructuring support agreement that will help slash its interest expense and reduce its debt load by about 91%. It also received $150 million in a new-money loan to help finance operations during the bankruptcy process, the company said in a statement.
“Today’s announcement marks an important milestone in our efforts to strengthen STG amidst one of the most severe freight recessions in history,” said Geoff Anderman, CEO of STG Logistics.
Before filing for Chapter 11, STG had been in private talks with its lenders as it worked to shore up cash after operational issues drained its liquidity.
The company agreed to a $300 million debt and equity financing package in 2024 that called for a below-par exchange in which those that negotiated the transaction jumped ahead in the repayment line. In response, a group of disgruntled lenders sued, alleging that the transaction was a “bad-faith scheme.”
STG has filed a number of standard “first day” motions which, upon approval by the court, will allow it to keep paying employee wages and benefits, maintain all customer programs, fulfill go-forward payments to key vendors and execute other ordinary business functions, the company said on Monday.
The Bensenville, Illinois-based firm primarily hauls shipping containers and other freight from ports and rail yards to warehouses, factories and distribution centers.
Private equity firm Wind Point Partners acquired the company in 2016 and is the majority shareholder. Oaktree Capital Management is also a shareholder.
