Performance Transportation Services Inc., the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, announced that its Plan of Reorganization became effective, marking the company's emergence from its voluntary Chapter 11 proceeding.
The company's Plan of Reorganization was confirmed on December 21, 2006, less than a year after PTS and its U.S. subsidiaries filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of New York.
PTS has met all requirements to emerge from bankruptcy and the implementation of the court approved Plan of Reorganization brings to a conclusion the company's financial restructuring process.
"Since commencing our voluntary reorganization, we have successfully restructured our financial position," said Jeffrey L. Cornish, chief executive officer and president of PTS. "Through this restructuring we have effectively put many challenges of our past behind us, permitting the company to emerge from Chapter 11 with a significantly less leveraged balance sheet, cash to fund operations and a financial structure that will allow us to compete successfully in today's auto industry. All of this forms a stronger foundation for success."
The terms of the plan call for secured creditors to be fully repaid in cash and shares. The Yucaipa Companies LLC, which holds the majority of the second lien debt, will receive New Common Stock. General unsecured creditors will receive proceeds from a Liquidating Trust. The Trust will pursue recoveries through avoidance actions and other litigation. Holders of Old common Stock will not receive any distribution and their equity interests will be cancelled. All the company's new equity will be held privately; going forward the New Common Stock issued pursuant to the Plan will not trade over any public exchange.
Pursuant to the Plan, PTS will continue to operate its three business segments -- E. and L. Transport, Hadley Auto Transport, and Leaseway Motorcar Transport. The management team will continue to manage these businesses in their current positions as the company emerges.
"Today, PTS is a stronger, more competitive company. We remain committed to a market philosophy that is based on solid long term relationships with our customers and vendors. We have been a recognized leader for innovation and customer service in our industry for years, and we intend for our leadership to continue," Mr. Cornish noted.