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 / Food, Beverage, & Tobacco / Food & Staples Retailing / Post-Bankruptcy Stocks

Buffet Restaurants Holdings Chapter 11 Petition, Plan Filed

Buffets Restaurants Holdings and 15 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 12-10237. The Company, which offers value-conscious chain dining, is represented by Pauline K. Morgan of Young Conaway Stargatt & Taylor. The Company concurrently announced a restructuring agreement that it has reached with senior lenders holding 83% of its senior debt, which will recapitalize the Company while eliminating virtually all of its approximately $245 million of outstanding debt. The recapitalization will provide the Company with resources to invest in its proven re-concepting program, as well as other restaurant and profitability improvement initiatives. “The important step we’re taking today is the culmination of the strategic alternatives review that our Board of Directors initiated in May 2011,” said Mike Andrews, C.E.O. of Buffets. Along with its Chapter 11 petition, the Company also filed a Joint Prepackaged Plan of Reorganization and related Disclosure Statement, which have been pre-negotiated with, and enjoy the full support of, senior lenders holding 83% of the Company’s senior debt. As part of the restructuring plan, the Company expects to promptly close 81 underperforming restaurants, representing approximately 16 percent of its nearly 500 restaurants nationally. The Company has negotiated a $50 million debtor-in-possession loan from its existing lender base, which in addition to cash on hand and ongoing cash flow from operations, is expected to provide ample liquidity to meet normal operating costs during the restructuring process. The Company emerged from a previous bankruptcy in April 2009.

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Is there value in bankrupt PG&E’s stock?

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."