Pitney Bowes, a prominent player in the shipping and logistics sector, has announced a strategic move to liquidate a significant portion of its e-commerce business through a bankruptcy agreement. This decision follows a pair of deals with Hilco Global and bondholder Oaktree Capital Management, as the company grapples with financial challenges within its e-commerce division.
Under the terms of the agreement, Hilco Global will acquire a controlling interest in Pitney Bowes’ e-commerce business. Hilco’s role involves not only managing the e-commerce assets but also overseeing their piecemeal sale. This approach aims to maximize the value of the assets during the bankruptcy process. Oaktree Capital Management, which holds both notes issued by Pitney Bowes and secured claims against the e-commerce units, has committed to supporting the bankruptcy proceedings, as detailed in court records and regulatory filings.
The e-commerce business filed for Chapter 11 bankruptcy protection on Thursday, marking a significant step in its efforts to address its financial difficulties. The filing lists substantial debts and assets, each estimated to be as much as $500 million. Chapter 11 is commonly used by companies to facilitate reorganization and continue operations, but it can also be employed to execute an orderly liquidation if reorganization is not feasible.
The decision to liquidate comes in the wake of substantial losses within Pitney Bowes’ global e-commerce operations. The company reported a loss of $136 million for the e-commerce segment last year, underscoring the financial strain the division has faced. By liquidating this segment, Pitney Bowes aims to streamline its operations and focus on its more profitable areas.
Interim Chief Executive Lance Rosenzweig highlighted that the restructuring plan will allow the company to concentrate on its core segments—SendTech and Presort—which will continue to operate normally. These areas of the business are not part of the bankruptcy proceedings and will remain unaffected by the liquidation of the e-commerce division.
As part of the bankruptcy process, Pitney Bowes will extend a $45 million loan to the e-commerce unit to support the insolvency case. This financial support is intended to facilitate an orderly and effective management of the bankruptcy proceedings, ensuring that the e-commerce assets are handled in a manner that maximizes their value.
