The Monsters: Private Equity Firms

..PE firms are where companies go to DIE and Trucking bankruptcies

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Note: Due to earnings season, the weekly posts will be aggregated and published over the weekend. Thank you.

Over the years, we have written several research papers on The Shadow Banks. You can access one of them here.

Today, we want to focus on the Monsters lurking in the shadows, the private equity firms, and the rise of PE-backed bankruptcies.

In September 2010, Jamie Dimon, the outspoken head of JPMorgan Chase warned that the post-crisis reforms could create “non-bank monsters”. A month later Vikram Pandit, the publicity-shy Citigroup chief, was less colourful but more explicit. “Shifting risk into unregulated or differently regulated sectors won’t make the banking system safer,” he said. And in Davos in January 2012, Gary Cohn, Goldman Sachs’ number two, made the mountain air even chillier. “What I most worry about,” he told me, “is that in the next cycle, as the regulatory pendulum swings, we are going to have to use taxpayer money to bail out unregulated businesses.”¹

Today, we will focus on the spike in biotech, trucking/transportation, and PE-backed bankruptcies.

Biotech Bankruptcies

On May 2, 2025, biotechnology company Molecular Templates Inc., which develops cancer treatment drugs, filed for Chapter 11 bankruptcy with plans to hand its assets over to its secured lender as part of a restructuring support agreement.²

The Austin, Texas-based healthcare company listed $2.49 million in assets and $29.4 million in debts in its petition filed on April 20, 2025, in the U.S. Bankruptcy Court for the District of Delaware.

On Feb. 10, 2025, Omega Therapeutics filed for Chapter 11 bankruptcy with a restructuring support agreement that called for its parent affiliate Pioneering Medicines 08-B to be the stalking-horse bidder with a credit bid of $9.92 million in debtor-in-possession financing, a roll-up of about $1.5 million in prepetition debt, assumed liabilities, and cure amounts.

Highlights: The biotechnology sector saw a spike in bankruptcy filings in the U.S. in 2023 and 2024.

Bankruptcy filings reached a peak with 14 in 2023, the highest number since 2010. In 2024, 13 biotech companies filed for bankruptcy, with six reorganizing and seven liquidating and going out of business.

The Transportation Bankruptcies - April and May 2025

Truck & Trailer Leasing Avenue

Truck & Trailer Leasing Avenue of Joliet, Illinois, filed for Chapter 11 bankruptcy on April 16 in the U.S. Bankruptcy Court for the Northern District of Illinois.

The company stated in the petition that it has both assets and liabilities of $10 million-$50 million and said that money would be available to pay unsecured creditors. The largest unsecured creditors are Bank Midwest of Kansas City, Missouri, owed about $818,000, and De Lage Landen Financial Services, owed about $623,000.

The filing marks Truck & Trailer Leasing’s second Chapter 11 case in just over a year, following a bankruptcy filed on March 21, 2024.³

Starr Rail

Starr Rail of Cooper, Texas, filed for Chapter 11 bankruptcy on April 11 in the U.S. Bankruptcy Court for the Northern District of Texas.

The company, which provides rail-to-truck and truck-to-rail transloading, as well as warehousing, contract packaging and last-mile dedicated trucking, has both assets and liabilities of $1 million-$10 million, according to the bankruptcy petition.

No funds will be available for unsecured creditors after administrative expenses are paid, according to the filing. The creditors with the largest unsecured claims are Canada’s CPKC railroad, owed about $220,000, and Kiamichi Railroad of Southlake, Texas, owed about $133,000.

LML Logistics

LML Logistics of Ocala, Florida, filed a Chapter 11 bankruptcy petition on Friday in the U.S. Bankruptcy Court for the Middle District of Florida.

The company stated in the petition that it has assets totaling $100,000-$500,000 and liabilities of $1 million-$10 million. Funds will be available for unsecured creditors, the largest of which are Farm Credit of Florida, owed about $794,000, and the Small Business Administration Economic Injury Disaster Loan program, owed about $107,000, according to the filing.

LML has 10 power units and 16 drivers, according to the Federal Motor Carrier Safety Administration’s SAFER website. It carries general freight, building materials, fresh produce, meat, refrigerated food and other products.

Accelerate360

Magazine distributor Accelerate360 Distribution filed a Worker Adjustment and Retraining Notification (WARN) Act notice Friday on its plan to close its Dakota Merchandising Work location in Sioux Falls, South Dakota.

A total of 324 permanent layoffs will result, including 22 people who work at a facility in Missouri, according to the notice.

“The employer anticipates that all employees who work in the Dakota Merchandising function will be laid off as a result of the work unit closure on June 28, 2025,” the WARN notice stated. “The decision to close the unit is due to these positions being outsourced.”

Kadam Logistics Corp.

Kadam Logistics Corp. of Chicago filed a Chapter 11 petition on April 4 in the U.S. Bankruptcy Court for the Northern District of Illinois. The company lists both assets and liabilities of $100,000-$500,000.

Kadam has a number of unsecured creditors, the largest of which are First Federal Bank & Trust of Sheridan, Wyoming, owed $98,000, and Transportation Alliance Bank of Ogden, Utah, owed about $84,000. The petition stated that funds will be available to pay unsecured creditors.

A notice of financial conditions filed with Kadam’s petition showed decreasing gross revenue the past few years. Revenue fell from about $1.5 million in 2023 to less than $1.1 million in 2024 and was at $360,000 so far in 2025.

Sweet Trucking Co.

Sweet Trucking Co. of Knoxville, Tennessee, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Tennessee on April 21.

Sweet Trucking’s gross revenue has fallen each of the past three years: about $2.7 million in 2022, roughly $2.3 million in 2023 and about $2.1 million in 2024.

The petition states the company has both assets and liabilities of $1 million-$10 million, and that funds will be available for unsecured creditors.

Among the largest unsecured creditors are the IRS, owed $75,000, Thompson Truck Leasing, owed about $67,300, and Truist Bank, owed about $51,500.

The SAFER website states that Sweet Trucking has 10 power units and 12 drivers. It carries metal, lumber, machinery and other goods.

Best Logistics Inc.

Memphis, Tennessee-based Best Logistics Inc. filed for bankruptcy protection in the Western District of Tennessee on April 7 2025.

The 3PL listed assets of up to $50,000 and liabilities of between $50,000 to $100,000. The company listed 49 creditors and maintains that funds will be available for unsecured creditors once it pays administrative fees.

Creditors include the IRS for payroll taxes, along with the city of Memphis and Shelby County, Tennessee.

Best Choice Trucking

Dedham, Massachusetts-based Best Choice Trucking LLC, which has nine drivers and nine power units, filed its petition Monday in the U.S. Bankruptcy Court for the District of Massachusetts.

The petition lists Ulysses Fabricio as president of the company, which hauls full-truckload, last-mile and hazmat freight.

Best Choice Trucking listed its assets and liabilities as between $1 million and $10 million. The company, which seeks to reorganize, has up to 49 creditors and maintains that funds will be available for unsecured creditors once it pays administrative fees.

Some of the company’s largest listed creditors include Digital Federal Credit Union for $1.6 million; Trans Lease Inc. for a 2023 Peterbilt 389 tractor ($386,585); and the U.S. Small Business Administration ($371,017).

Best Choice Trucking’s trucks had been inspected eight times, with no vehicles placed out of service in a 24-month period, according to the Federal Motor Carrier Safety Administration’s SAFER website.

The carrier’s drivers had been inspected 17 times over the same 24-month period, with three drivers being placed out of service, resulting in a 17.6% out-of-service rate. The national average is around 6.7%, according to FMCSA.

C & C Freight Network

C & C Freight Network, a Braselton, Georgia-based trucking company with seven drivers and trucks, filed for Chapter 11 bankruptcy protection on April 7, 2025 in the U.S. Bankruptcy Court for the Northern District of Georgia.

In its petition, C & C Freight Network listed its assets and liabilities as between $1 million and $10 million. The company, which seeks to reorganize, states that it has up to 49 creditors but said no funds will be available for unsecured creditors once it pays administrative fees.

C & C Freight Network’s largest creditor is the Small Business Administration for a COVID-19 economic injury disaster loan for $161,425.

Other creditors include Headway Capital LLC for equipment ($87,945); Fora Financial Advance LLC for equipment and inventory ($72,939); MCA Servicing Co. ($63,842); Mint Funding Inc. ($60,364); and BMO Harris Bank for a 2020 Volvo tractor ($56,545).

C & C Freight Network’s trucks had been inspected eight times, and three had been placed out of service in a 24-month period, resulting in a 37.5% out-of-service rate. This is higher than the industry’s national average of around 22.3%, according to the FMCSA.

The carrier’s drivers had been inspected 23 times over the same 24-month period with two drivers being placed out of service, resulting in an 8.7% out-of-service rate. That compares with the national average of around 6.7%.

C & C Freight Network’s common carrier authority was granted in April 2016.

The bankruptcy petition lists Charles Alderman as manager of C & C Freight Network, which hauls general freight.

The Surge of PE Bankruptcies

The first quarter of 2025 saw a disproportionate number of large private equity bankruptcies. 7 out of 10 bankruptcies at companies with over $1 billion in liabilities were at companies owned by a private equity firm.

• Private equity-backed companies represented 75 out of 697 bankruptcies in 2024, 11% of all corporate bankruptcies.⁴

• Private equity-backed companies represented 27 of 48 bankruptcies with over $500 million in liabilities at the filings, 56% of large bankruptcies.

• Private equity-backed companies represented 18 of 35 bankruptcies with over $1 billion in liabilities, 54% of the largest bankruptcies.

• Private equity-related bankruptcies in 2024 have resulted in at least 65,850 layoffs.

Just three months into 2025, the industry is already outpacing that track record. These large private equity bankruptcies include the clothing retailer Forever 21, the healthcare giant Prospect Medical, and Joann Craft Stores. Joann is shuttering after filing for bankruptcy for the second time in a year.

According to S&P data, PE firms are seeing increased stress in its healthcare investments.

Twenty-seven private equity- or venture capital-backed US healthcare companies filed for bankruptcy in 2024, a record year for portfolio company bankruptcies. Only the consumer discretionary sector saw more private equity portfolio companies file for bankruptcy protection in 2024, with 29 seeking in-court restructurings.

CORPORATE GUIDANCE

We are tracking corporate guidance for the 1Q 2025 across the board and we will share the findings with our clients.

The corporate guidance issued by listed companies were more pessimistic in the first quarter.

During the period, 30 executive teams shifted their outlook. The updated guidance reduced future performance expectations in 12 cases, or 40% of the total.⁵

Note: We are tracking companies issuing or withdrawing FY 2025 guidance during the 1Q 2025 calls. We will share them once it is aggregated.

1. https://www.ft.com/content/72503e60-48dd-11e0-af8c-00144feab49a

2. Pacer Monitor Tracker

3. https://www.freightwaves.com/news/bankruptcies-and-layoffs-slam-wide-range-of-transportation-companies#:~:text=Carriers%2C%20logistics%20firms%20from%20Florida,to%20weigh%20on%20freight%20markets.

4. https://pestakeholder.org/reports/private-equity-bankruptcy-tracker/#:~:text=Private%20equity%2Dbacked%20companies%20represented,%2C%2056%25%20of%20large%20bankruptcies.

5. https://www.spglobal.com/market-intelligence