- 7/24/17 Recap: When we saw that this company filed for bankruptcy, we were practically drooling. We immediately thought: the narrative had to be an Uber-is-to-blame story for a company like Rent-a-Wreck filing for bankruptcy, didn't it? And so we decided to cover it, despite its relatively small size, writing the following: In Silicon Valley, "disruption" is a buzzword that wide-eyed startup founders use to drum up excitement about their new venture, raise funding, and determine product/market fit. 79-90% of the time - depending on which data you rely on - those companies flame out. But sometimes they don't. And in the even rarer case that a startup doesn't just succeed but becomes a unicorn - or maybe even a decacorn a la Uber - that success is usually to the detriment of other incumbent companies. Take Rent-a-Wreck ("RAWA"). RAWA, through its wholly-owned opco, Bundy, sells and administers franchises for the operation of vehicle rental/leasing/sharing, among other automobile business lines. There are 76 RAWA franchises in 28 US states in addition to some international operations. The company makes its money from franchise fees, servicing fees, and insurance underwriting via a non-debtor insurance subsidiary. Or, we should say, MADE its money. EXCEPT, according to the company's First Day Declaration, this isn't an innovation/disruption story. It's a more mundane cash-flow-draining-litigation story. How disappointing. The company filed for bankruptcy to rightsize its franchise network, stop the bleed from litigation/judgments, streamline ops, and try to maximize the value of its intellectual property. It seeks a $750k DIP from its prepetition lender/equityholder to do so. What a waste of a solid Silicon Valley commentary.
- Jurisdiction: D. of Delaware
- Capital Structure: $2.47mm secured debt
- Company Professionals:
- Legal: Quarles & Brady LLP (Faye Feinstein, Christopher Combest) & (local) Saul Ewing LLP (Mark Minuti, Aaron Applebaum)
- Claims Agent: KCC (*click on company name above for free docket access)
- Other Parties in Interest (no UCC appointed):
- 100% Equity Owner & DIP Lender: JJF Management Services Inc.