New Chapter 11 Bankruptcy - Vasari LLC (d/b/a Dairy Queen)

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Vasari LLC

  • 10/30/17 Recap: Texas-based large franchise operator of Dairy Queen brand restaurants operating approximately 70 locations across Texas, Oklahoma and New Mexico filed for bankruptcy. Burdened under the weight of its debt, its lease obligations, and franchise fees, the company struggled to generate revenue to offset its obligations. Why? Well, somewhat surprisingly, the company doesn't immediately dive into the "restaurant excuse bin" (air-quotes) with hackneyed narratives like "bad weather," "experiential desires" and "millennials don't SNAP upside-down frozen treats." Rather, the company notes, "[t]he difficulties faced by the Debtor can largely be traded to the much publicized decline in oil prices. The decline in oil prices has severely impacted the job market for oil related jobs in regions of west Texas and east Oklahoma and has thus resulted in cross-industry declines in revenues in areas heavily dependent on oil related jobs." The company continues, "Since bouncing from a 12 year low, oil prices have begun to rebound; however, oil-related jobs have not. Without oil-related jobs, certain DQ locations will likely continue to underperform, causing a drain on the Debtor's resources." Hurricane Harvey was the cherry on top, disrupting operations in 17 locations. Now, the company intends to use bankruptcy to continue to evaluate its store footprint, shed some stores, and pursue a sale of the remaining locations. 
  • Jurisdiction: N.D. of Texas (Judge Mullin)
  • Capital Structure: $10.8mm debt (Cadence Bank NA), $777k PIK subordinated promissory note.    
  • Company Professionals:
    • Legal: Husch Blackwell LLP (Vickie Driver, Christina Stephenson, Ryan Burgett, Alexander Terras)
    • Financial Advisor: Mastodon
    • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition/DIP Lender: Cadence Bank NA
      • Legal: Morris Manning & Martin LLP (Frank DeBorde, David Mayo) & (local) Gardere Wynne Sewell LLP (Holland O'Neil, Jason Binford)  
    • Official Committee of Unsecured Creditors
      • Legal: Gray Reed & McGraw LLP (Jason Brookner, Michael Bishop, Lydia Webb)

Updated 11/17/17