Sales of at least two Comcar units in the company’s bankruptcy action ran into strong headwinds this past week in a Delaware bankruptcy court.
The latest opposition to Comcar’s previously-announced plans to sell off its various operating units came between Thursday and Friday, when the proposal to sell flatbed hauler CT Transportation to PS Logistics for less than $10 million broke out into a full-scale bidding war.
The second point of resistance over the week came with the creditors’ committee raising strong objections to selling bulk carrier CCC Transportation and CTTS Repair to a company controlled by former Comcar CEO Mark Bostick. The creditors’ committee described the deal as “reminiscent of Tom Sawyer’s swindle.”
Comcar has completed the sale of MCT Transportation.
It appears that in the disputed sale of CT Transportation, the only thing that stopped the back-and-forth of Thursday and Friday was the presence of the weekend.
When the bankruptcy filing of Comcar was announced in May, Comcar said it had reached an agreement to sell CT to PS Logistics. That company has been very acquisitive in the trucking sector, having acquired Celadon Logistics, Riechmann Transport and Robinette Trucking since the end of 2018.
In a document filed with the Delaware Bankruptcy Court Friday, lawyers for Canada’s TFI International said it had put in a late-inning bid for CT through its Bulk Transport East Co. subsidiary. The document describes a bidding process that appears to have left PS as the agreed-upon winner of the process for $14 million, but with TFI complaining about the way the auction was handled and claiming it has a $15 million offer on the table.
The fate of that $15 million bid is like a season-ending cliffhanger; there was no further indication of what is going to happen to it in any documents, except that it appears closing day for whoever gets CT is supposed to be Monday, June 22.
There is another document filed with the court, an amended sales agreement, that shows that the original purchase price for CT was $8.75 million. That was up from an earlier price of about $6.8 million.
The $8.75 million from PS was accepted by Bluejay Advisors, which has been hired by Comcar to advise and handle most of the disposal of assets.
“Despite their purported knowledge of the transportation industry….Bluejay never contacted TFI in Bluejay’s sales process solicitation,” TFI complains in its filing.
The document then spells out a back-and-forth process in which TFI through Bulk Transport submitted multiple bids for CT, but which suggest a cool reception from Bluejay to this new bidder.
The dispute led to a Zoom call auction that TFI thought it had won with a bid of $13.5 million, and the requirement that it close on June 22. But on Thursday evening, TFI received a note from Bluejay that said “As we all may have expected, P&S did lob in a bid today for $14 million,” but said that Comcar would be “pleased” to accept a bid better than that of PS.
“(Comcar’s) counsel conveniently failed to say when the bid came in and in a subsequent email, evidencing intent to chill any further bidding indicating only that it had come in ‘earlier today,” TFI’s attorneys write.
Just before midnight Thursday, according to the document, TFI put in a bid for $15 million. According to the time stamps in the TFI filing, it got a call from Bluejay at 10:30 p.m, the bidding was then closed at 11:37 p.m. and nine minutes later, TFI submitted its $15 million bid.
TFI also submitted to the court a sales document that could be used to complete the sale on June 22. But there are no further documents in the case filing indicating where the sale stood as the week came to a close.
CCC sale to Comcar founder’s son is opposed by creditors committee
The second area of contention is over the sale of bulk carrier CCC and CTTS Repair. When the bankruptcy and breakup of Comcar was announced, the buyer of those two assets was not disclosed, unlike the sale of CT.
What court documents reveal is that they are to be sold to the former CEO of Comcar, Mark Bostick. Bostick is also the son of the late Guy Bostick, the founder of Commercial Carrier Corp., the company that eventually became Comcar.
It is a transaction, according to the filing by the Creditors Committee, “the proprietary of which leaves one scratching her head.” The filing notes that there is not yet a purchase agreement on the Bostick deal, just a letter of intent.
According to the Creditors Committee filing, the deal would transfer CCC and CTTS to companies controlled by Bostick, collectively known as CWI. But the filing says the transfer of assets would also include real estate in Auburndale, Florida, that the Creditors Committee filing says alone is worth a little more than $4.4 million.
In exchange, Comcar would get “certain used trailers that may be worth approximately $1 million.”
“The Bostick/B2 Settlement Motion does not provide for any cash consideration to the bankruptcy estates,” the filing says. The fact that it’s called a settlement motion is because there is ongoing litigation between Comcar and Bostick over an agreement from several years ago regarding a complex series of agreements covering debt for equity and real estate rights.
The trailers themselves are already part of a lease agreement between Bostick-controlled CWI and CTTS. The committee says there is information about the lease that it can’t lay its hands on, and “contend(s) the Trailer Lease is a disguised financing arrangement.”
The objections by the Creditors Committee can be summed up in one of its section heads: “The proposed asset swap provides an apparent windfall to CWI/Bostick.”
One other key area of objection: a promise by CWI to offer “comparable” employment to CCC and CTTS employees. That would allow Comcar to avoid liabilities under Florida’s WARN Act, which requires notice of employee dismissals in advance.
“However, CWI Logistics is not required to hire any employees, which could leave (Comcar” subject to WARN Act liability,” the filing said. “CWI should be required to provide enforceable assurances regarding the hiring of the (Comcar) employees.” If not, it should accept WARN Act liability, the filing said.
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