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STG to Exit Chapter 11 in Coming Weeks as Court Backs Plan
Intermodal, Drayage Carrier Sought Court Protection in January
Key Takeaways:
- STG Logistics said it expects to exit Chapter 11 bankruptcy protection within weeks after a New Jersey court approved its reorganization plan May 18.
- STG reduced funded debt by more than $1 billion after restructuring obligations tied partly to its 2022 acquisition of then-XPO Logistics’ intermodal business.
- STG will receive the final $25 million of committed financing and become majority-owned by investors led by Fortress, Fidelity and Invesco after emergence.
STG Logistics expects to emerge from Chapter 11 bankruptcy protection in the next few weeks after receiving a key assent to its plans, the intermodal and drayage services provider said.
Dublin, Ohio-based STG and 64 affiliates filed for court protection Jan. 12 in the U.S. Bankruptcy Court for the District of New Jersey.
On May 18, the bankruptcy court approved the company’s reorganization plan.
“Confirmation of our plan is a monumental milestone that puts our company on a clear path to emerge from Chapter 11 with a strong financial foundation and significantly deleveraged capital structure,” said STG CEO Geoff Anderman.
“With meaningfully reduced debt levels and new capital to invest in our business, we will be well-positioned to continue doing what we do best: delivering integrated port-to-door solutions and exceptional service to our customers,” Anderman added.
STG entered Chapter 11 proceedings to carry out a debt restructuring. The company reduced its funded debt obligations by more than $1 billion during the process.
The company will receive a final $25 million of $150 million in previously committed capital to support business operations when it exits bankruptcy protection.
In January, STG arranged $150 million of debtor-in-possession (DIP) financing from some existing lenders to allow it to reorganize its finances. DIP loans are intended to see a company through bankruptcy proceedings.
STG also signed a restructuring support agreement (RSA) with equity backers and lenders that held a majority of the carrier’s debt. STG was owned by Wind Point Partners, Duration Capital Partners and Oaktree Capital Management when it sought court protection.
The RSA was expected to eliminate around 91% of STG’s outstanding debt obligations.
STG operations continued normally throughout the Chapter 11 process. In January, STG said it would be “business as usual” for customers.
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When STG exits bankruptcy protection, the company will be majority-owned by a group of financial institutions led by funds managed by Fortress Investment Group, Fidelity Management & Research Co. and Invesco Senior Secured Management.
The biggest hurdle to exiting bankruptcy protection was settling litigation related to a 2024 liability management transaction. The LMT involved an earlier $300 million debt restructuring. Minority lenders, including Axos Financial and Siemens Financial Services, challenged the LMT in New York state court.
That restructuring was due to STG carrying substantial debt resulting from a major expansion. In March 2022, STG bought then-XPO Logistics’ North American intermodal operations for $710 million.
STG said it had reached a settlement over the LMT on April 27. The May 18 approval finalized the settlement.
When filing for protection, STG’s largest creditor was Union Pacific Railroad, which was owed more than $13.4 million.
While a number of carriers or their owners — such as Paladin Capital and Montgomery Transport — entered bankruptcy proceedings during the freight market downturn as a precursor to asset liquidation, historically, Chapter 11 has been a tool for indebted companies to reorganize their finances.
