Restructuring – or getting approval to reject – its contracts with nine labor unions is a key to the Chapter 11 petition filed today by The Greenbrier.
That is evident in an affidvait filed in the bankruptcy by Michael McGovern, chief financial officer of Greenbrier Hotel Corp., which also makes it clear that finding a buyer for the resort was a tough sell.
Marriott Hotel Services is agreeing to buy the resort only if CSX Corp., which owns the resort now, is willing provide $50 million to be used in Marriott’s operation of the Greenbrier.
That appears to be attractive to CSX because The Greenbrier has lost $90 million over the last five years, with the CSX picking up the tab for most, if not all, of that deficit.
McGovern says the resort’s labor costs take up more than 70 percent of its revenues when the industry average for labor is 40 percent or less.
If the resort can’t renegotiate its labor contracts, it will ask a bankruptcy judge to allow it to reject them under Sec. 1113 of the Bankruptcy Code, McGovern says.
By Alan Cooper