Jack Cooper Ventures says it will be “business as usual” as the auto hauler undertakes a restructuring.
As the Teamsters signaled earlier Tuesday in a note to its members, Jack Cooper did file for Chapter 11 protection on August 6 under the federal bankruptcy code in the Northern District of Georgia.
In a prepared statement, the company said it would implement a “comprehensive, court-supervised restructuring” aimed at reducing its debt by more than $300 million. The statement affirmed earlier Teamsters statements that almost 2,000 jobs would be preserved.
“During the restructuring process, the Company will remain focused on successfully serving its customers and should emerge in an expeditious manner as a stronger business,” the company said.
The restructuring calls for the company’s largest lenders to cancel their debts in exchange for purchasing “all or substantially all of (Jack Cooper’s) assets.” But a spokeswoman for Jack Cooper said the company that will be acquiring the assets is New York-based Solus Alternative Asset Management, which she described as “a long-time supportive lender.”
The lenders will also supply debtor-in-possession financing to keep the company afloat. (Debtor-in-possession lenders are generally the first to get repaid in a bankruptcy proceeding.)
“The…new financing, combined with cash generated by the business, will support ongoing operations, fund payment of employee salaries, wages and health benefits in the ordinary course, and ensure that suppliers are paid as usual for goods and services provided during the process,” the statement said.
The lenders – soon to be owners – are also expected to invest “significant funds” into Jack Cooper, including capital that would help the company meet its goal of replacing 80 percent of its existing fleet with new equipment over the next five years. The Teamsters’ statement had described the investment in new equipment as a requirement that at least $20 million per year would be invested in a new fleet, enough to purchase 100 vehicles per year through 2023.
The existing company management will stay in place during the bankruptcy proceedings, the statement said.