PITTSBURGH — In a move that was long expected by rental industry participants, Pittsburgh, Pa.-based Maxim Crane Works filed for Chapter 11 bankruptcy protection last week. The largest crane rental company in the United States, Maxim announced that the bankruptcy court has approved the company's requests to pay pre-petition and post-petition employee wages, salaries and benefits during its voluntary restructuring under Chapter 11, which began June 14.
The court also granted the company immediate use of its debtor-in-possession financing facility to continue operations, pay employees, and purchase goods and services going forward. In conjunction with the filing, Maxim received commitments for up to $70 million in DIP from a group of lenders led by Goldman Sachs and Fleet Boston to fund operations during the restructuring.
CEO Al Bove said he was pleased with the bankruptcy court's prompt approval of its first-day orders and DIP financing.
“The action taken in court was very positive for our restructuring efforts. We expect the DIP financing to provide adequate funding for our post-petition trade and employee obligations,” Bove said, noting that the company has been in contact with many of its major suppliers and customers, who have indicated that they will support Maxim during the restructuring process, which is expected to conclude during the fourth quarter of this year.
“The Court has granted us permission to continue all of the programs that are vital to our daily operations ensuring that it should be business as usual at our 45 branches during the restructuring,” said Maxim president Arthur Innamorato. “With the first day motions behind us, we can return our focus to the task at hand — operating one of the nation's safest heavy equipment rental companies and providing our customers with the highest level of service.”
Maxim officials emphasized that the issues the company faced were financial and not operational. “Although the company's financial performance remains strong, the slowdown in the economy and the leveraged balance sheet that was created in the late 1990s have made it necessary for Maxim to restructure its balance sheet,” said Bove. “Over the past three years, we have systematically adjusted our cost structure and have always generated positive cash flow. With the economy showing signs of recovery, now is the time to strengthen our capital structure.”
The court also granted the company approval to maintain existing insurance policies and pay post-petition insurance premiums.
Maxim Crane Works filed its voluntary petitions in the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh.
Maxim Crane, No. 8 on the RER 100, is the third top-10 rental company to file for bankruptcy protection in the past two years. Fort Lauderdale, Fla.-based NationsRent successfully emerged from Chapter 11 protection in June of last year, and Chicago-based National Equipment Services emerged from its reorganization earlier this year.