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
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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.
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The company grew both organically and through acquisition and began to experience declines in profit margins and liquidity.
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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.
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Prepared historical financial statement analysis and benchmarking to develop an understanding of company position and potential alternatives.
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Developed four wall analysis to understand store level profitability, ranking, and contribution to company profits.
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Prepared store level valuations to determine collateral value versus loan obligations and to assist in negotiating store divestitures.
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Utilized store level data analytics to develop store retention and disposition plan.
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Developed financial models (balance sheet, income statements and cash flow statements) to support:
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The go forward 5-year plan, the capital structure, collateral value, loan covenants, and plan feasibility.
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The 13-week cash flow forecast.
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The negotiations and structure of the unsecured creditor priority and non-priority claims.
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Results
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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.