Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Post-Bankruptcy Stocks / Household & Personal Products / Retailing

RoomStore Chapter 11 Petition Filed

RoomStore filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of Virginia (Richmond), case number 11-37790. The Company, which offers moderately priced, good quality and fashionable furniture and accessories, is represented by Troy Savenko of Kaplan & Frank. According to documents filed with the SEC, “On December 8, 2011, the Company’s Board of Directors resolved to voluntarily file for reorganization under Chapter 11 of the United States Bankruptcy Code (‘Chapter 11’). The Company’s Condensed Consolidated Financial Statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities and commitments in the ordinary course of business. The working capital position and the losses from operations have raised substantial doubt about the Company’s ability to continue as a going concern….The Company is in the process of evaluating and securing debtor-in-possession (‘DIP’) financing in connection with the intended Chapter 11 filing. The reorganization of the Company is expected to result in the closing of a significant number of stores and reductions in staffing and overhead expenses. There are no assurances that the Company will be successful in securing satisfactory DIP financing, obtaining Bankruptcy Court approval of an implementing a plan for reorganization although the Company expects to sign a DIP financing loan within the next several days and is in serious discussions with multiple lenders.”

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In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017


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What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."