Canadian transportation and logistics firm Pride Group and its affiliates have filed for Chapter 15 bankruptcy in the United States as the company aims to restructure amid soft conditions in the trucking industry.
Pride Group’s transportation assets include 805 trucks and 2,600 trailers across North America, but the company now seeks bankruptcy in Canada and the United States, according to court filings in both countries. Pride Group Holdings has 25 affiliate companies. All are included in the filing, and the companies are seeking to have their cases jointly administered.
Mitsubishi HC Capital America, which filed one of the largest lawsuits against Pride Group, declined to comment on the proceedings. There are 46 claimants against Pride Group and its affiliates, including many of the largest transportation financial services companies, according to filings with the U.S. Bankruptcy Court for the District of Delaware, including:
- Daimler Truck Financial Canada for $193 million;
- Mitsubishi HC Capital America for $100 million
- Daimler U.S. for $69.7 million;
- Paccar Financial for $46.9 million; and
- Volvo Financial Services Canada for $9.8 million.
Among the listed claimants are: BMO, First American Commercial Bancorp, Galeco Leasing, GreatAmerica Financial Services, Hitachi Capital America, Mercedes-Benz Financial Services USA, Milestone Trailer Leasing, National Bank Financial, National Trailer Leasing, Our Community Credit Union, Regions Bank, Royal Bank of Canada, TBK Bank, The Bank of Nova Scotia, TD Bank, VersaFinance US and VFS US.
Despite the bankruptcy filings, Pride Group expects to experience “business-as-usual” as it looks to restructure, according to a release from the company.
Impact on trucking industry
As Pride Group navigates the bankruptcy processes in Canada and the U.S., its inventory could be lucrative on the open market, Steve Oliver, vice president of business development at truck auctioneer Taylor and Martin, told Equipment Finance News.
“The equipment that Pride Group has in inventory at their dealerships is late-model, front-line ready equipment and will be desirable in a few different distribution channels if it is remarketed properly,” he said. “The same end users that may have purchased or leased them from Pride will still be interested in the equipment and will be hoping to get a discount on their purchase.”
With manufacturers such as Daimler, Paccar and Volvo maintaining backlog and pre-buy, the Pride Group’s units could fill an important gap in the industry, Oliver said.
“Given the pre-buy that is expected as a response to new emission regulations scheduled for 2027, this equipment may fill the gap between new truck production and the demand expected for those new trucks,” he said. “New-truck dealers may be the most affected by the amount of late-model used [trucks] put on the market at once, as end users may elect to buy late-model versus new trucks in the current environment.”
Regardless of the marketplace, demand for these trucks should persist, Oliver said.
“Other dealers will be there to grab that inventory, much of it retail ready, and sell it themselves,” he said. “There will be an appetite in the market for these trucks.”
Rates a factor
Still, freight rates and interest rates over the past few years created the macroeconomic conditions leading to the bankruptcy decision, according to the company’s bankruptcy filing in the Ontario Superior Court of Justice.
“Increased spot freight prices, and low diesel prices and interest rates during the pandemic led to an increase in trucking and logistics supply,” according to the filing. “This ultimately resulted in an oversupply of trucking and logistic services, which resulted in declining spot freight prices at the same time that diesel prices and interest rates went back up.”
Meanwhile, trucking lenders still await rate cuts to help alleviate current market conditions, lenders previously told EFN.
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