FORT LAUDERDALE, Fla. — Citing NationsRent's failure to find a new chief executive and its shaky financial condition, creditors of the Fort Lauderdale-based construction equipment rental firm last month sought bankruptcy court approval to file a reorganization plan on its behalf.
NationsRent's inability to hire a new CEO has created “an absolute lack of leadership to guide the debtors to a successful reorganization,” according to a motion filed by the unsecured creditors committee, comprising businessmen who are still owed from the sale of their companies to NationsRent. The committee wants the court to allow it to file its own plan and, thus, select an executive to lead NationsRent.
“NationsRent will be filing an objection to that motion shortly,” Mark Baker, a company spokesman, told the Miami Herald. The company filed its reorganization plan in June, about six months after filing for Chapter 11 bankruptcy protection. Under that plan, about 59 percent of $762 million in claims would be paid.
Some unsecured creditors, though, are unhappy with how NationsRent's plan treats them, the Herald reported. The creditors have been offered an unspecified amount of warrants at an undetermined strike price, while a group of primary lenders — owed $762 million — would receive virtually all of the stock of the reorganized company. Some senior NationsRent managers could receive up to a combined 10 percent equity in the company.
The plan was developed by a management team that is largely responsible for NationsRent's troubles, the committee states in its motion. They say existing management has little industry experience and that a number of NationsRent executives have departed in recent months.
NationsRent has blamed its financial problems on competition from consolidators and a slowdown in construction spending. It has been searching for a new chief executive since James Kirk, who founded the company, resigned in February. Under a post-petition financing arrangement with lenders, NationsRent had to hire a new CEO by June 30 … a deadline that was later pushed back to July 31. Philip Petrocelli, formerly an executive vice president, currently serves as chief executive.
Required by lenders to find a new chief executive by the end of July, NationsRent disclosed last month it was seeking another deadline extension. In the filing, NationsRent reported a $31 million loss for the first quarter of the year, bringing its total losses to more than $1 billion.
Fort Lauderdale, Fla.-based NationsRent is No. 6 on the RER 100.