😎Notice of Appearance - Adam Meislik 😎
Adam Meislik, Co-Founder and Partner at Force 10 Partners
This week we welcome an appearance by Adam Meislik, Co-Founder and Partner at Force 10 Partners, a boutique restructuring and turnaround advisor. We’re happy to have Adam here as we dedicate more time and effort in ‘25 to the lower and middle markets than we traditionally have. Let’s dive in.
PETITION: Thanks for doing this, Adam. Let’s start at a higher level, tell us about yourself and Force 10. What was the impetus for you and your co-founders to leave your prior gigs and found the firm back in ‘16? What opportunities did you see that weren’t being served by the market:
Adam: Thanks for inviting me to "appear." I apologize in advance if I go off on a tangent, get too wonky, or lose focus. After answering everything, I realized my professional life had come full circle when discussing LMEs and private credit. That was fun.
I appreciate this question about my background and Force 10. I will get our advertising out of the way and be done with it.
I started as an investment banker at Jefferies and CIBC, primarily working on high-yield deals in the energy sector. The industry's cyclical nature meant I got thrown into restructurings early, and that work stuck with me. My first few years were a blur—living at the printers, cranking out adjusted (as if) EBITDA calcs, hunting for misplaced commas in indentures (before and after Plain English), battling sleep deprivation, and surviving on M&Ms. It was intense, but I learned a ton.
I found my way back into restructuring through XRoads, working on a distressed cruise line. Later, at GlassRatner, I focused on lower-middle-market cases and kept running into the same problem. These companies were dealing with complex restructurings but couldn't access the right resources or advisors.
That led me to team up with my close friend Nicholas Rubin. We built a solid practice together, but eventually, we saw an opportunity to do something on our own. We left with one junior colleague and joined forces with Brian Weiss, a go-to restructuring guy in Southern California. We hit the ground running and launched Force 10.
The lower middle market comes with unique challenges—funded debt, and operational issues are part of it. However, litigation, governance breakdowns, and fraud often play a more significant role than people expect. That's why we built Force 10 to work differently and address it. Our firm comprises ex-ibankers, ex-bankruptcy attorneys, CPAs, and FP&A types. We keep teams lean—just 2-5 people per case—and often serve as both restructuring advisor and investment banker. Many of our cases use Chapter 11 to untangle multi-party disputes, and we've developed a niche in investment fund restructurings, stepping in when fraud or mismanagement blows things up.
PETITION: One area that has been active lately in the lower to middle market is the restaurant space. Your firm worked as financial advisor and CRO to both the BurgerFi and Rubio’s Coastal Grill chains. In both instances, y’all had to run quick sale processes and, in the end, both chains – or what was left of them after closures of underperforming locations – were sold to TREW Capital Management. Talk to us about the restaurant space. What are some industry-specific challenges that you and your team have seen in these matters? And give us a prediction about the space to come? Do you see an uptick in activity and where/when? What are the catalysts?
Adam: Restaurant bankruptcies tend to follow familiar patterns—rising costs (labor, food, rent), declining dine-in traffic, and third-party delivery squeezing margins. Chapter 11 can help shed underperforming locations, but the question remains: can the brand drive traffic without destroying margins? And does the balance sheet allow enough time to execute?
Full-service dining continues to struggle as more consumers prioritize grocery spending. Third-party delivery now accounts for ~20% of food sales but erodes profitability. Chains are locked in a race to the bottom, using aggressive discounting to lure customers but sacrificing margins. Even McDonald's Corp’s ($MCD) $5 meal deal barely moved the needle. Promotions can drive short-term traffic, but they won't fix a broken balance sheet — ask Red Lobster, which learned the hard way with its Ultimate Endless Shrimp fiasco.
But there are bright spots. Chili's engineered a successful turnaround with its Triple Dipper and Three For Me promotions, boosting traffic by 20% and same-store sales by 30%. Its owner Brinker International Inc. ($EAT) is happy. I didn't rush in for this deal: my tastes lean toward potato skins and mozzarella sticks. I checked, and Chili's doesn't have loaded potato skins, but someone started a petition. TGIF could've used my nostalgia before it filed.
Beyond short-term sales trends, more profound structural shifts are at play. The rise of GLP-1s is already impacting packaged food and could hit restaurant traffic, especially for legacy brands catering to older demographics. Alcohol sales — a key profit driver — are also declining as younger consumers drink less. Over-saturation is another issue: there are too many restaurants, and too many fail to stand out. Younger diners prioritize experiences and fresh concepts over legacy brands. That's why concepts like CAVA Group Inc. ($CAVA) thrive (stock up 96% TTM) while others struggle to stay relevant. Even Chipotle Mexican Grill Inc. ($CMG) employees get tired of their own. I see them ordering Mendocino Farms to their social media studios in our office building.
And the pressure isn't easing. We may return to an inflationary cycle, further squeezing restaurant margins. Consumers have already signaled they won't tolerate another round of price hikes, forcing brands to find new ways to stay profitable. That's a tall order when costs keep climbing, traffic is shifting, and legacy brands struggle to remain relevant.
Restaurant restructurings aren't slowing down, particularly in casual dining and franchise-heavy brands. Distressed investors are circling, looking for the next trade. TREW bought the debt in BurgerFi right before the filing, only to flip it to the Savvy Sliders/Happy's Pizza group weeks later. More deals like this are coming. Google for a list of who's next.
PETITION: The team seems nimble, taking on both company-side and creditor engagements. With respect to the latter, we noticed that your team tackled the representation of the official committee of unsecured creditors in the Cano Health matter early last year. We’ve obviously seen a lot of bankruptcies come out of physician practice roll-ups. What’s your take on that case and the wave of roll-up bankruptcies generally?
Adam: Force 10 was briefly in Cano before that engagement team left to form their firm and focus solely on committee work. About 50% of our practice is healthcare, and the industry issues facing Cano are widespread, so I’m happy to discuss them. Beyond Cano, we’ve worked on other physician practice roll-ups, rural and urban hospital systems, urgent care, surgery centers, skilled nursing, long-term acute care, assisted living, and behavioral health.
Physician roll-ups are failing due to unrealistic financial assumptions, particularly regarding valuation. Many sponsors overpaid, assuming they could achieve cost synergies through centralization and secure higher reimbursement rates with insurers — neither of which occurred. Meanwhile, Medicare reimbursement has declined by approximately 30% in real terms, driven by five consecutive years of conversion factor cuts. At the same time, budget neutrality rules have further reduced specialty payments to offset increases for primary care. Adding to the pressure, the No Surprises Act has restricted out-of-network billing and lowered payments for out-of-network services, undermining aggressive revenue models. As a result, procedural groups are facing shrinking revenue while labor costs continue to rise.
Private equity’s debt-heavy model faces a refinancing crunch, with ~$12b in healthcare-related sponsor-backed debt maturing in ‘25. Potentially rising interest rates and tight margins increase the risk of covenant breaches and financial distress, so more healthcare bankruptcies are inevitable.
Programming note: There are new sheriffs in town — RFK Jr. and Dr. Oz. What they’ll do (or be told to do) with CMS and reimbursement is anyone’s guess. We've already started to see some chaos and budget cuts.
PETITION: Retail has also been a real hot spot for bankruptcy lately. You’ve got some battle scars yourself from the industry. Tell us about Tuesday Morning. If memory serves, that was one of the uglier retail bankruptcies with all kinds of shenanigans. Do tell. Did you walk away with any big lessons from that one?
Adam: Tuesday Morning was a doozy. We were brought in as replacement FA on the eve of filing. The original plan was to wind down operations and liquidate. Still, Invictus and management believed they could deliver more to creditors via a 363 sale with Invictus set up as the DIP lender and intentions to be the stalking horse. Once we got involved, we realized not everyone was on board. We inherited the Invictus DIP loan situation, including the priming fight with Wells Fargo and Gordon Brothers. Although we prevailed on the interim priming issues, the problem with Invictus was twofold — Invictus didn't live up to their lending commitments and didn't submit the stalking horse bid they committed to providing during the first days. We returned to the pre-petition lenders for cash and ended up with two DIPs — a first for me — fighting over collateral. It just turned into a big ball of expensive twine. When we finally got to the auction, Invictus intended to credit bid their DIP loan plus cash in a 363 sale, but once again, they couldn't show convincing evidence of their ability to perform, so we went with Hilco. It still wasn't over. We fought over highest and best too. Ultimately, Hilco's deal was ordered, and they did a very professional job taking control of fleet operations while we wound down corporate. We wanted Invictus to show us the money because they intended to operate most of the locations after we culled out the bad stores (for the second time — it was also a 22), but they couldn't.
Still left with the inter-creditor and other contentious issues, we ultimately reached a global settlement and converted the case. That was about two years ago, and we are still providing the Chapter 7 trustee with information.
The Invictus litigation train kept rolling. Invictus and their LPs, unsatisfied with Tuesday Morning's outcomes and another case (DeCurtis), took their grievances to Chancery Court. I've since lost interest and need to check back in. Someone reading this will email me an update if they get this far.
Do I hear someone cranking Steve Miller's Band?
As for Tuesday Morning, the writing was on the wall from the get-go. It was a 22 for an aged retail chain catering to an aging demographic. There is a lesson there.
PETITION: We note that you’ve served as an expert witness in a ton of bankruptcies, largely focusing on valuation, solvency, and fraudulent transfer litigation. Any good war stories you can share from those experiences? The juicier, the better.
Adam: Truthfully, I always dread it, but the stress of it forces me to dig in deep, and I think about my positions and what I am up against every minute until it's over. Once it's over, I am usually very pleased. I see many expert gigs as training for and participating in a triathlon with the runner’s high at the end. I testify from the viewpoint of a practitioner, not as an academic. I don't have any letters after my name, and I usually come up against experts with an alphabet soup after their names. I enjoy seeing the range of expertise and positions on the other side — it's vast.
To answer your question about a juicy situation, I offer our involvement with Michael Avenatti. Before his prison sentence, Avenatti was best known for representing Stormy Daniels, who had a one-night stand with someone "many people say" is the world's most prolific litigant. Ahem… Pardon Me, Kind Sir…
My partner, Brian Weiss, was appointed Receiver over Avenatti’s law firm. One of our first tasks was securing control of the firm’s files, including those related to the Stormy Daniels-Trump litigation. After assessing the situation, we determined that filing Chapter 7 was the best way to resolve the claims against the firm. We then worked closely with the Trustee, supporting fraudulent transfer actions and other litigation.
The Stormy Daniels-Trump case files remain on a server in our office, and we've provided discovery to several three-letter agencies.
PETITION: Changing it up, to put it lightly, it’s hard not to notice the current and looming trade wars the new administration has been instigating with historic US allies. You know, Canada, Mexico, Western Europe. Plus China’s in the mix. No doubt there’s going to be mostly bad news across the board and we’ll all be enjoying marginally less avocado toast for the foreseeable future, but any particular industries you’d peg to experience higher levels of distress? Of them, which is your pick to experience the most in ‘25? What kinds of calls are you getting on this?
Adam: Who knows what underlies this administration's tariff policy and its true objectives. Assuming the administration sees tariffs through, the homebuilding industry could be in for a rough ride. With the administration threatening to roll out 10-25%+ tariffs (it changes every day) on key construction materials — lumber, gypsum, steel, and aluminum from Canada, Mexico, and China — builders are bracing for higher costs at a time when affordability is already a significant challenge. While it's still early, they will push up construction costs if these tariffs stick. That's significant, especially considering the market already has a shortage of around six million homes and a 40% price increase since ‘20.
Builders are already managing tight margins, so they'll either have to absorb the higher expenses, pass them along to buyers, or cut back on projects altogether. If affordability worsens and demand slows, that will pressure the industry. Labor challenges could compound the problem. The construction industry depends heavily on immigrant labor, and many are undocumented. If Tom Homan has his way, workforce shortages will delay projects and increase costs. That combination — rising material costs and a shrinking labor pool — could slow development just when more housing is desperately needed.
Trade groups are pushing for exemptions on construction materials, arguing that these tariffs contradict efforts to improve housing affordability. At this point, it's unclear how the administration will respond and what is happening.
I saw a headline recently that the federal government should open federal lands for housing development. That would help, but we may have to make room for the Gazans too.
PETITION: Conversely, any industries you expect to do better (or at least, less bad) under the circumstances? How so?
Adam: Yes, Steel. Steel has global overcapacity and tons of foreign subsidies, particularly from China. After the ‘18 tariffs, over $10b in new mill investments were announced. Price increases on tariffs can stick around even after they are removed. Of course, steel prices have repercussions through many supply chains, but steel should do well. Their lobby certainly thinks so.
Segments of Wall Street will do well — currency and commodities trading and arbitrage strategies:
Needless to say, I am not a fan of this tariff talk and the many justifications coming out of this administration. Eventually, this game will end with dead chickens on the road.
PETITION: What would be your selection for the most impactful restructuring matter of the past year and why? Feel free to acknowledge a matter that filed for chapter 11 or one that restructured out-of-court (but try to be a rare breed in RX circles and not talk your own book).
Adam: I read through several of your previous Notices of Appearances, and I agree with Andrew Glenn that it's Wesco. I won't rehash it. We were in the Serta case, and I didn't expect that appellate decision. It just means LME setups will continue to mutate until they are roaches that can survive almost anything.
Aside, it’s still Purdue. Even though it’s been working through the system for years, it looms large. Anyone reading this newsletter knows the drill: debtors continue to push the boundaries with opt-in and opt-out provisions, the UST and the SEC object (that's the Spirit!), and courts are increasingly skeptical. We were recently in court early in a Chapter 11 case involving a large number of consumer investors in a life insurance investment scheme, and the Judge signaled his perspective.
PETITION: Put your prediction cap on: what do you think the biggest restructuring theme of this year will be? Anything poised to throw more spanners into the works than the sky-high tariffs?
Adam: I will put on my tin foil hat here and discuss how Project 2025 could benefit RX professionals. Project 2025 could create new opportunities for us by shifting the resolution of failing financial institutions away from government-controlled processes and into the judicial system. A key policy goal of Project 2025 is the repeal of the Orderly Liquidation Authority (OLA) — a mechanism established under the Dodd-Frank Act that allows federal regulators, specifically the FDIC, to step in and wind down systemically important financial institutions (SIFIs) when their failure poses a risk to the broader economy. The rationale behind OLA is to provide a structured, government-managed liquidation process that prevents chaotic collapses, avoiding a repeat of the ‘08 financial crisis. However, Project 2025 sees OLA as a bailout tool that undermines market discipline by shielding large financial firms from the full consequences of insolvency. It advocates using Chapter 11 bankruptcy as the primary mechanism for financial firm restructurings, arguing that this will promote transparency, fairness, and accountability. To this end, Trump issued a Presidential Memorandum on the OLA during his first administration.
If Project 2025 succeeds in repealing OLA, the responsibility for unwinding large financial institutions could shift to the existing Chapter 11 process. Some have proposed modifications to Chapter 11, such as a new "Chapter 14" framework, to make it more effective for handling complex financial firms. I don’t think the OLA mechanism has been used yet, but you never know.
PETITION: What do you think is the next lower to middle market strategy we’ll start seeing bigger companies avail themselves of? For example, LMEs are all the rage now, but contrary to what big law firms and banks would have you believe, they’ve been a staple in the middle market and below for years and years.
Adam: It's just a question of capital flexibility and avoiding many restructuring headaches. Private credit is now clearly at the big boy table for the benefit of large-cap issuers funding $500 million+ deals regularly, which is right in the wheelhouse of smaller high-yield issuances. In ‘24, nearly 30% of private credit transactions crossed $250mm. Mega-funds are soaking up capital, and investment banks are shifting their focus. Something like over $1.5T is expected to flow into private credit funds over the next four years and that's a lot of money to put to work. Naturally, those inflows will chase bigger deals and yield.
Private credit structures increasingly use tools like PIK toggles, delayed-draw term loans, and covenant-relief periods to help borrowers manage downturns without triggering defaults. Today, many private credit loans include PIK features and an increasing number of larger private credit deals have scrapped or neutered maintenance covenants in favor of high-yield-style incurrence tests. High-yield bonds followed a similar evolution in the 80s and 90s, as issuers and investors learned that avoiding technical defaults often maximized long-term recoveries.
One of the most significant advantages private credit offers is the unitranche loan. Instead of stacking senior and junior debt in different tranches like high-yield, unitranche financing rolls everything into one package. That's great for borrowers because it simplifies execution and is a huge plus in a restructuring scenario. There's no first-lien versus second-lien fighting, which minimizes game theory and waiver and consent solicitation issues and costs.
High yield is still less expensive, but spreads are tightening.
PETITION: The biggest controversy in RX circles in ‘25 will be _________?
Adam: I don't know if it'll be the most significant controversy, but conflict avoidance and more robust disclosure will get plenty of attention this year.
Being in California, we don’t always immediately catch Delaware court news. The other night, over dinner before The Eagles show, I sought opinions from a few Delaware bankruptcy lawyers. Without missing a beat, they cited Judge Silverstein’s decision denying Willkie’s employment in Franchise Group. Sure enough, it was in PETITION the next day.
Restructuring professionals are deeply interconnected through transactions and relationships. Our community is small, and we inevitably cross paths with the same parties and professionals. Large firms struggle to track all potential conflicts — AI might eventually help with that.
Recently, we’ve been conflicted out of a few cases — not due to actual conflicts, but because the perception of one gave another party leverage, making it not worth the risk. Hopefully, nothing will rise to the level of Judge Jones-style conflicts anytime soon.
McKinsey avoided a knockout, but the fight was brutal. My firm should have such problems. 😜
PETITION: Starting to wrap up, what is one issue that you believe not enough people are focusing on and, consequently, clients aren’t thinking through? Could be legal, financial, or anything else.
Adam: I will veer away from legal and 'deal' issues and discuss the core of restructuring success for a going concern. As financial advisors, we are paid to be laser-focused on projecting financial performance. Clients need to get back to basics — dig into fundamental financial analysis to determine which businesses or segments are profitable and generate returns above their cost of capital. Many great companies operate with rigorous financial discipline, but too many still rely on gut instinct and tradition, managing with napkin math and seat-of-the-pants decision-making. Companies must develop and adhere to a structured financial analysis framework.
We all grew up using spreadsheets, but they promote garbage in and garbage out.
Running deep scenario modeling and probability analysis required expensive, specialized software that most lower-middle market companies couldn't access or understand. Complex financial analysis is becoming more understandable and accessible through Python and generative AI (now both built into Excel). Companies can leverage Monte Carlo simulations and probabilistic forecasting tools to stress-test projections beyond static outcomes. Too often, financial forecasts become gospel when they should be seen as a range of possible outcomes with optimal strategies based on probability-weighted scenarios. Feasibility standards like "more likely than not" are too broad — they only test a single result. Simply put, too many of our assumptions are priced to perfection. If we started viewing financial forecasts as probabilistic ranges instead of certainties, we could likely avoid many cash collateral defaults, post-LMEs, and Chapter 22s.
PETITION: Finally, we have a lot of smart readers in the earlier stages of their careers. Any advice for budding entrepreneurs out there looking to forge a path off the beaten track? Any books or other resources that you’d recommend?
Adam: I recommend Fortune’s Formula by William Poundstone. My kid introduced me to it a few years ago. A key figure in the book is Edward Thorp, a mathematician who pioneered card counting in blackjack and later applied probability theory to investing. He collaborated with Claude Shannon to build a wearable computer predicting roulette spins. He later developed quantitative investment strategies, launching one of the first arbitrage-focused hedge funds. The book also covers the Princeton-Newport Partners scandal and the rise and fall of Long-Term Capital Management.
At its core, the book explores the Kelly Criterion, a formula for optimizing capital allocation. Initially developed for gambling and investing, it helps determine how much capital to allocate to a given "bet" — investment or divestment — by balancing probability and potential return. Beyond investing, the Kelly Criterion can also be applied to financial forecasting, helping to model optimal capital deployment and risk-adjusted growth strategies. In restructuring, this means prioritizing high-risk-adjusted return investments while maintaining liquidity.
Similar to my last response, my advice to the kids is to learn how to measure risk and allocate capital, dig deep into Python, and leverage generative AI (beyond creative writing) to let them focus on high-value-added work. Sorry if this sounds like “The Weave.”
PETITION: Thank you, Adam. Appreciate your time, and wishing you and the Force 10 team all the best.
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
🍾Congratulations to…🍾
Daniel Splittgerber on his promotion to Partner at Latham & Watkins LLP.
Hugh Murtagh on his promotion to Partner at Latham & Watkins LLP.
Kelley Drye & Warren LLP (James Carr, Robert LeHane, Nathan Greenberg) and Cole Schotz PC (Justin Alberto, Patrick Reilley, Sarah Carnes) for securing the legal mandate on behalf of the official committee of unsecured creditors in the Liberated Brands LLC chapter 11 bankruptcy cases.
That was a great and interesting interview. Always fun learning about something I barely know about. Keep up the good writing and interviews, Thank you!!