Gainey Corp. files for bankruptcy

user-gravatar Headshot

Gainey Corp. announced on its website a Chapter 11 reorganization filing in response to a $238 million lawsuit filed Sept. 26 by Wachovia Bank concerning loans it made to the company.

“The nation’s financial crisis has compelled our lenders, including Wachovia Bank, to make ill-advised decisions based on their own cash constraints,” said Harvey Gainey, chief executive officer of the Grand Rapids, Mich.-based company. “Those constraints have placed Gainey Corporation and its operating companies in a very difficult situation.”

Wachovia’s lawsuit — which also names Gainey Transportation Services, Super Service, Freight Brokers of America, Aero Bulk Carrier and Gainey Insurance Services as defendants — alleges that Gainey Corp.:

  • Fired Alvarez & Marshall North America, a restructuring company retained by Wachovia, after being notified of $7.6 million in defaults on principal and interest payments;
  • Continues to pay part of Harvey Gainey’s $1.3 million salary;
  • Continues to pay $186,850 per month in rent to Gainey Realty, which is owned by Harvey Gainey;
  • Continues to pay $115,000 per month to lease an aircraft from Gainey Aircraft, which is owned by Harvey Gainey; and
  • Continues to provide Harvey Gainey with a 2007 Mercedes sedan for his use.
  • “Our exhaustive efforts to negotiate a constructive agreement with our lending group have been met with a series of increasingly aggressive actions by these lenders,” Gainey said. “Faced with recent actions by Wachovia Bank, the company has decided that the only reasonable course that will allow us to serve our customers and preserve jobs is a Chapter 11 reorganization filing.”

    Gainey Transportation Services — ranked No. 61 in CCJ‘s annual Top 250 ranking of for-hire trucking companies — owns 2,132 tractors and 4,800 trailers, and employs 1,585 company drivers. “Our sound business fundamentals – which include positive cash flow and operating income – will continue to ensure our uninterrupted operations, including paying all suppliers, delivering all freight and meeting our payroll,” Gainey said.