Case Study

As a direct result of the global COVID-19 pandemic, Pepi Corporation suffered an 85% reduction in total sales, ceased operation at more than half of their storefront locations across Texas, Illinois, and California, and terminated or furloughed over 50% of their staff.

Additionally, the company was facing the maturity of several term loans as well as delinquent lease payments at a material number of its locations.

As a result, the shareholders required a fresh look at the company’s options and opportunities.

MACCO was engaged as Financial Advisor by the shareholders after referral from proposed insolvency and bankruptcy counsel. Upon engagement, MACCO rapidly assessed the company’s current state of operations and financial position. Fortunately, the Company had astute and professional management and financial reporting resources to draw upon.

MACCO deliverables included providing Pepi Corporation with 13-week, 36-month, and 48-month cash forecasts, consolidating and renegotiating all loans with Amegy Bank, and preparing them for a Subchapter V, Small Business, Chapter 11 filing. The rapid assessment and MACCO’s recommendations occurred over the period of approximately 10-days.

Thereafter MACCO worked for several weeks with the Company and legal counsel in preparation for a swift and successful bankruptcy filing.

Through strategic planning, negotiation, and execution of the Subchapter-V Chapter 11 filing, MACCO working with bankruptcy counsel, successfully “pre-packaged” a plan of reorganization for the Debtor. The plan was widely accepted, met with initial approval from the bankruptcy court, received no resistance from any party and was confirmed approximately 60-days after filing.

The plan was self-funded that allowed Pepi Corporation to assume leases at desired storefront locations and reject leases at undesired storefront locations, thus saving significant leasehold/contract damages while improving operations. Pepi Corporation was provided a new opportunity for long-term success where previously, it appeared prospects for success where limited.