Restaurant Franchise Owner

Phoenix serves as Chief Restructuring Officer and Chief Financial Officer to arrange and negotiate the sale of a franchise owner and operator under 363 of the U.S. Bankruptcy Code.

The Client

Phoenix’s client owned and operated 25 Restaurant Franchises in several Mid-Atlantic states with aggregate annual revenue in excess of $35 million.

The Challenge

Significant losses, a poorly conceived capital structure, and considerable corporate governance challenges had led the Company into a default with its secured lender and franchisor. When Phoenix was hired, loan and franchise payments were more than a year in arrears. In addition, a seller note had recently gone in default. Each member of the Board of Directors had personally guaranteed some portion of the debt. There was no consensus as to who was actually on the Board or when the Board had last met, as two separate groups each believed they comprised the Board of the Company. In addition, various members of the Board were threatening loss suits against each other. A seasoned restaurant executive was hired by the Company, but the secured lender was becoming increasingly concerned about what seemed to be a free fall situation.

The Solution

Phoenix was appointed Chief Restructuring Officer and immediately provided direction and leadership to the Company. After the termination of the CFO, the Board also appointed Phoenix as CFO. The work load of stabilizing the restaurant was divided between the interim CEO and Phoenix. The CEO took responsibility for addressing day-to-day restaurant responsibilities, and Phoenix took responsibility for all financial functions, creditor interface, and the Company’s capital structure. Phoenix led negotiations with all parties that led to a consensual filing of bankruptcy that allowed Phoenix the time to develop a plan to maximize creditor recoveries while minimizing the exposure of each of the guarantors. Phoenix negotiated with the Company’s franchisor to purchase the Company at a generous bid that allowed the franchisor to protect its market share while maximizing a recovery to all of the constituents.

Phoenix Turnaround

Primary Industry

  • Services

Secondary Industry

  • Restaurants

    Primary Services

  • Interim ManagementBusiness / Operational AssessmentsBankruptcy Advisory