Franchise Services of North America Inc. Announces Chapter 11 Bankruptcy Filing
RIDGELAND, MS, June 27, 2017
TSX-V Trading Symbol: FSN
RIDGELAND, MS, June 27, 2017 /CNW/ - FRANCHISE SERVICES OF NORTH AMERICA INC. (“FSNA” or the “Company”) (FSN.V) today announced that in order to best preserve the value of its assets for the benefit of creditors and shareholders, it filed for Chapter 11 bankruptcy protection on Monday, June 26, 2017, in the federal bankruptcy court in the State of Mississippi.
FSNA is the holding company for operating entities that own several car rental brands whose associated independent operators have more than 650 locations across the United States. The Company anticipates that these subsidiaries will continue to operate their businesses in the normal course during the pendency of the Chapter 11 case. No layoffs are anticipated at FSNA or any of its subsidiaries.
The Company’s decision to seek bankruptcy protection was necessitated by several factors, including liquidity issues associated with expenses incurred in pending litigation by and against its former financial advisor, Macquarie Capital (USA), Inc., and two Macquarie employees who also served as directors of the Company, as well as other legacy claims against the Company. The Company’s litigation expenses relate to the Company’s acquisition of Simply Wheelz LLC, d/b/a Advantage Rent A Car, which was led by Macquarie and its affiliates. The Company also remains impaired by potential claims that arise from the Advantage acquisition.
The expenses and claims arising from the failed acquisition and, in particular, those fees and expenses associated with these actions pending with Macquarie and its associates in multiple jurisdictions have severely impacted the Company’s liquidity, strained the Company’s ability to operate, and necessitated that the Company seek bankruptcy protection.
FSNA is a publicly traded company listed on the TSX Venture Exchange. The Company and its subsidiaries own the following brands: U-Save Car & Truck Rental® (“U-Save“), U-Save Car Sales, Auto Rental Resource Center (“ARRC“), Xpress Rent A Car, Sonoran National Insurance Group and Peakstone Financial Services.
U-Save, together with its subsidiary ARRC, has over 650 locations throughout the United States and is one of North America’s largest franchise car rental companies. U-Save currently services 21 airport markets in 9 different states and 12 countries. Although primarily based in the United States, U-Save has 16 international locations in Mexico, Greece, Central America and the Caribbean.
With more than 150 years of combined insurance experience, Sonoran National Insurance Group is licensed in all 50 states and serves customers in every part of the country. Sonoran provides an entire range of business and personal insurance solutions customized to the needs of its clients.
Certain statements made in this news release are forward-looking in nature, including
statements concerning the ability of FSNA’s subsidiaries to operate in the ordinary course following an insolvency filing. The words “may”, “could”, “should”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, or “outlook” and similar expressions often identify forward-looking information. By their nature, forward-looking statements require FSNA to make assumptions and are subject to inherent risks and uncertainties. The forward-looking statements contained in this news release are based on certain key expectations and assumptions made by FSNA, including with respect to general economic, market and industry conditions. Although FSNA believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because FSNA can give no assurance that they will prove to be correct. These forward-looking statements also involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of FSNA to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. If any such risks actually occur, they could materially and adversely affect FSNA’s business, financial condition or results of operations. FSNA’s forward-looking statements are qualified in their entirety by these cautionary statements. In addition, the forward-looking statements are made only as of the date of this news release, and except as required by applicable securities law, FSNA undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Franchise Services of North America Inc.
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