Restaurant Holding Co

The Situation

  • Restaurant holding company of three banners with 86 locations in the Northeastern U.S.
  • Management made significant efforts to revitalize brands with updated menu options, improved food quality and increased capital investment in selected locations
  • Efforts did not offset the lingering negative impact of the previous management team’s underinvestment in business and, in the case of two former executives, criminal activity
  • Guest count, revenue, and cash flow declined; over 20 locations had negative four-wall EBITDA in the trailing 12 months; accounts payable were stretched thin and the vendor base became increasingly restive
  • Investment banker was hired to sell the three banners to separate purchasers, but absent a bankruptcy filing, most potential buyers decided not to take the risk of investing additional capital into the company


Financial Advisory

  • P&L and cash-flow forecasting
  • Multiple scenarios for Chapter 11 or Chapter 7 bankruptcy

Bankruptcy Advisory

  • Cash-flow management, vendor negotiations and due-diligence support to the investment bankers in a multi-stage 363 sale

The Work

  • Engaged by company to model the projected profitability of each location
  • Managed cash-flow, which became increasingly challenging as vendors negotiated shorter payment terms and inventory was at risk
  • As bankruptcy quickly became best option, the engagement team prepared for filing and negotiated a DIP loan with company’s senior lender
  • Closed 37 stores immediately before the bankruptcy filing and debtor preserved the right to sell the liquor licenses from the closed stores to generate distributions for constituents
  • Managed the bankruptcy process, controlled cash flow, stabilized operations, and provided due-diligence support to investment bankers, who brought multiple interested parties to the table

The Results

  • Key employees remained with company during bankruptcy and critical vendors continued shipping on time and in full
  • Senior lender increased DIP-loan funding to fund negative cash flow while assets were being marketed
  • All three banners were sold to financial buyers with nearly all locations remaining open post-transaction
  • Gained additional asset recoveries for constituents by selling multiple liquor licenses from closed stores in New Jersey, Pennsylvania, and Massachusetts
  • Negotiated restitutions to the estate from two members of the previous management team

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  • Restaurant
  • Bankruptcy Advisory

Engagement Team