United Road Towing enters bankruptcy, exploring asset sale options

By Caroline Salls

Pittsburgh, Feb. 7 – United Road Towing, Inc. filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware.

Chief financial officer Michael J. Mahar said in a statement filed with the court that the company began exploring strategic alternatives to restructuring, including the potential sale of its business as a going concern, when it was unable to resolve a class action lawsuit.

In the two weeks before the bankruptcy filing, Mahar said United Road received nine written indications of interest in purchasing its assets, and the company is continuing to work with these parties as they continue their due diligence.

As part of debtor-in-possession financing negotiations, the company agreed to several milestones related to this sales process, including entry into a stalking horse purchase agreement by Feb. 22, holding an auction by March 27 and having a sale hearing conducted by March 30.

In conjunction with the bankruptcy filing, the company obtained a commitment for $35.25 million in DIP financing, including up to $12.5 million available on an interim basis.

Wells Fargo Bank, NA is the administrative and collateral agent.

Interest will accrue at a rate of Libor plus 250 basis points.

The DIP facility will mature on the earliest of April 28, the closing of a sale of substantially all of the company’s assets and the effective date of any Chapter 11 plan.

According to court documents, United Road Towing has $10 million to $50 million in assets and $50 million to $100 million in debt.

The company’s largest unsecured creditor is a group of class action plaintiffs, with a $5 million claim. No other unsecured creditors were listed with claims of $1 million or more.

The company is represented by Young Conaway Stargatt & Taylor, LLP, Grace D. D'Acry and Winston & Strawn LLP.

United Road is a Mokena, Ill.-based towing, recovery, impound and vehicle management solutions company. The Chapter 11 case number is 17-10249.

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