Car Hauler Allied Systems Files for Bankruptcy

Creditors of Allied Systems Holdings Inc. forced the Atlanta-based vehicle transporter and 18 U.S. and Canadian subsidiaries into Chapter 11 protection on Sunday.

The company, which defaulted on $244 million of loans in May, says it has lined up $20 million in financing from lenders to keep its afloat during bankruptcy.

Allied says the reorganization won't interrupt its operations. The company conveyed more than 2.5 million vehicles from factories to dealerships last year. Allied discloses that it lost the business of Chrysler, General Motors, Honda and Toyota when it tried to boost its rates 15% in March 2011.

Chrysler and General Motors sued Allied in March, alleging the transporter was holding a combined 2,400 of their vehicles hostage after they rejected the rate hike. The automakers also complained that finished vehicles were accumulating outside their factories after Allied halted service.