Bankruptcy Trustee

Chapter 11 Trustee for Montana based restaurant company with 16 franchise restaurants in three states

Situation

Shoot the Moon, LLC, did not have the necessary operational controls in place for the restaurants to function successfully and began losing money as a result. When the company became financially distressed and all bank financing options were exhausted, the company president began illegally seeking out funds from private investors without registering as a securities broker in the state of Montana. In addition, several cash advance loans had been taken with 400% interest rates. Once the cash advance companies began collecting the debt through daily automatic withdraws and depleting the account funds, this forced the business into filing protection under Chapter 11 bankruptcy.

Strategy

This engagement represented unique challenges including:

– D&O Claims

– Preference Claims

– MCA Recoveries

– Kiting Claim

– Aiding the Criminal Prosecution of a Ponzi Scheme

In addition to these complexities, Shoot the Moon had 16 active restaurants that required immediate intervention. After conducting a thorough analysis of solvency, decision was made to immediately shutter 8 stores to preserve profitable core operations. Resolute quickly moved to reorganize the business by operating the company, retaining employees to continue business operations, reducing costs, and increasing margins. This process including working with franchises to demonstrate operations could continue with delayed payments. After stabilizing operations, Resolute was able to market the remaining stores for sale.

Additional actions include performing preference claim analyses to recover any payments made to creditors within the 90 days prior to bankruptcy; reviewing fraudulent transfers and performed merchant cash advance recoveries; conducting a thorough analysis of solvency; investigating Ponzi scheme with loans from private investors without a registered securities broker; recreating historical financial statements; and assisting with investigation into criminal charges filed against the business owner.

Result

Resolute was able to successfully administer the sale of the business enterprise via §363 Sale of Strategic Assets, along with liquor licenses, for nearly $12.5MM.