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Case Study

Debtor’s Financial Advisor
Convenience Stores

A convenience store operator with 100 stores experienced a significant decline in profit margins, prompting it to file for Chapter 11 bankruptcy.

Situation

Turnaround & Restructuring Initiatives

  • The company operated convenience stores that included fuel marketing and operated a fuel distribution business that distributed branded and non-branded fuels to its company owned stores.
     

  • The company grew both organically and through acquisition and began to experience declines in profit margins and liquidity.
     

  • The company filed bankruptcy without pre-negotiated restructuring arrangements with its major stakeholders.  Claims Summary: $35 million in secured debt, $7 million government debt, and $5 million unsecured debt.

Appointed as Debtors Financial Advisor in the United States Bankruptcy Court – Eastern District of Louisiana to develop a financial plan of reorganization.

  • Prepared historical financial statement analysis and benchmarking to develop an understanding of company position and potential alternatives.
     

  • Developed four wall analysis to understand store level profitability, ranking, and contribution to company profits.
     

  • Prepared store level valuations to determine collateral value versus loan obligations and to assist in negotiating store divestitures.
     

  • Utilized store level data analytics to develop store retention and disposition plan.
     

  • Developed financial models (balance sheet, income statements and cash flow statements) to support:

    • The go forward 5-year plan, the capital structure, collateral value, loan covenants, and plan feasibility.

    • The 13-week cash flow forecast.

    • The negotiations and structure of the unsecured creditor priority and non-priority claims.

Results

  • The U.S. Bankruptcy Court confirmed the debtors plan of reorganization within 6 months of court appointment as debtors’ financial advisor.  The equity owner/debtor retained control of the company and the company returned to profitability.

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