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Can bankruptcy be beneficial? For entrepreneurs looking for opportunities, the answer is “yes”

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Entrepreneurs can take advantage of bankruptcy to develop their businesses (Photo: Disclosure – Pexels)

Many entrepreneurs fear the word “bankruptcy” and avoid going down this path at all costs. However, some stories may contradict the almost unanimous opinion. Executive Adam Zitsiff was CEO of Gold Gym, a California health club network, when the company filed the application in May 2020. “I don’t use the letter ‘F’,” he said. stated at the time. His public relations firm preferred a euphemism: “restructuring through legal process”.

But can bankruptcy be a good thing? Website Franchise hours Enlisted entrepreneurs who have used the process to their advantage in doing business. The first of them is Chris Rowland. The CEO of Pet Supplies Plus, a pet food company, took swift action when news broke last November that a competitor, Pet Velu, was closing its 358 stores in the United States.

“We have heard your liquidation announcement and have contacted and spoken to your real estate department. They provided us with information on which stores were of particular interest to us, ”Rowland explains.

Pet Supply Plus acquired 40 stores with sales plans for the franchisee, half of which is owned, while the other half was in the hands of the franchisee shortly after closing.

“From start to finish, it was really fast. We did most of the bureaucracy and the negotiations in 30, 45 days. We are moving much faster than usual. We have a very robust process and we have been able to expand our capacity, ”said the CEO.

However, Rowland added a dose of caution. “You have to be careful not to get too excited. Although we were interested in a lot of properties, there were obviously a lot more that we didn’t take, ”he explained. “We have re-examined the real estate process again to ensure that the assets make sense for our brand.”

For Greg Flynn, CEO of Flynn Restaurant Group, the bankruptcy of NPC International, which had more than 1,200 restaurants and $ 1 billion in debt, was a good acquisition opportunity. Flynn Restaurant Group announced in March that it had purchased 937 units of Pizza Hut and 194 other Wendy’s restaurants, all owned by NPCs, for $ 522.5 million.

“NPC’s bankruptcy lawsuit created great opportunities as they closed 300 stores,” Flynn said. The business restructuring also included retaining top performing employees, which increased productivity.

Jeff Heitel, president and chief operating officer of Sisys, an American franchise restaurant specializing in pizza, cited a number of factors that led to the bankruptcy. “We had $ 83 million in bank debt with four banks, and as store volumes declined during the pandemic, we lost 100 stores. At the time, the company was not worth $ 83 million, ”he said.

Suppliers and employees were paid, Hettel said, but guarantees were needed to honor physical point rental commitments. The way was to reduce the structure of the company.

“We had a large head office. We returned to our offices and distribution center years ago. It was a chance to make the machine lighter and more aggressive, ”said Sisys president.

As Cicis properties were left vacant, they were used for rental to franchisees. Then, D&G Investors bought the brand. In total, this process took 34 days.

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