75-year-old heavy equipment dealer files Chapter 11 bankruptcy

The retail sector has faced economic challenges in the last two years that have resulted in several companies filing for bankruptcy protection, seeking to stay in business.

Auto parts suppliers and retailers, furniture chains, home goods chains, apparel, shoes, and accessories retailers, discount retailers, and specialty retail chains have all filed for bankruptcy protection to reorganize their businesses and restructure their debt.

All of them seem to complain about the same problems: rising labor and product costs driven by inflation and tariffs, increased interest rates on their debt, high brick-and-mortar lease rates that need to be renegotiated, and changing consumer attitudes toward shopping.

Reorganizing and restructuring debt has been the popular path forward to remaining a going concern.

In some cases, as sale of assets to a major secured lender can save a company from a devastating liquidation. 

Financial distress has also affected iconic retail businesses that are essential to the construction industry, such as heavy equipment providers.

Related: Iconic greeting cards chain files for Chapter 11 bankruptcy

Some companies have been forced to file for bankruptcy protection to avoid liquidation and remain a going concern. 

Worldwide Machinery files bankruptcy to avoid liquidation

Huge heavy equipment dealer Worldwide Machinery Group Inc. filed for Chapter 11 protection seeking to sell its equipment assets to Macquarie Equipment Capital Inc. for $52.5 million in a going-concern transaction

A sale to Macquarie would prevent the debtor's lenders and certain liquidators from facilitating a liquidation of the debtor's assets.

It would instead result in the new owners leasing the company's assets to a new entity, Diversified Holding LLC, controlled by the debtor's shareholders, which plans to continue operating the company.

Diversified would obtain the debtor's remaining assets and assume most of the company's trade obligations, according to a declaration by the debtor's Chief Restructuring Officer Scott Avila, a principal at Paladin Management Group.

Macquarie Equipment Capital submits best offer

Worldwide Machinery had marketed its assets over the last four months for either a going-concern sale or on a liquidation basis and received a highest and best offer from Macquarie for a going-concern sale.

The Houston-based debtor's asset-based loan lenders had proposed to sell its claims at less than par to an affiliate of liquidator Gordon Brothers Commercial Industrial LLC, a company that had participated in the marketing process and submitted an uncompetitive claim for the debtor's assets, the declaration asserted.

More bankruptcy:

• Unusual bar and restaurant chain files Chapter 7 bankruptcy
• Major healthcare company files Chapter 11 bankruptcy, seeks sale
• Home improvement retail supplier files for Chapter 11 bankruptcy

The debtors did not consent to any transaction between the ABL lenders and Gordon Brothers, who tried to force the debtors to consent, as the lenders said they would not extend the debtor's forbearance of its debt past Sept. 5.

Lender and liquidator offer would provide debtor no value

"Moreover, the claim sale would provide the debtor's estates with no value, would undermine any going-concern transaction (or other value-maximizing transaction) and would provide the debtors no assurance with respect to the resolution of claims (with Gordon Brothers having only indicated that it was contemplating placing the debtors in receivership following such a purchase)," Avila said in the declaration.

The debtor and three affiliates decided their best option was to file for Chapter 11 protection on Sept. 11 in the U.S Bankruptcy Court for the Southern District of Texas to give it breathing room to pursue and close a going-concern sale within 30 days of filing its petition.

Worldwide Machinery stock ownership:

• Adam Greenberg, 41.28%.
• J. Evan Greenberg, 41.28%.
• Caspian Capital and affiliates, 10%. 

The company is 82.5% owned by brothers Adam Greenberg and J. Evan Greenberg. The company was founded by their grandfather Joseph Greenberg in 1949, and then operated by Alan Greenberg, father of Adam and Evan, from 1967 to 1991.

Caspian Capital LP and affiliates hold 10% of the company's stock.

Worldwide Machinery listed $100 million to $500 million in assets and liabilities in its petition.

Worldwide Machinery's top unsecured creditors:

• Caspian Capital, owed over $70.9 million.
• Wagner Equipment, owed over $1.3 million.
• Beard Transport, owed over $274,000.

The debtor's largest unsecured creditors include Caspian Capital LP, owed over $70.9 million in a loan balance; Wagner Equipment, owed over $1.3 million in trade debt; and Beard Transport LLC, owed over $274,000 in trade debt

Worldwide Machinery focuses on three business segments: renting heavy equipment, buying and selling heavy equipment, and renting and selling specialty equipment.

Related: Another brewery and brewpub chain closes, no bankruptcy