Case | HBS Case Collection | December 2005 (Revised April 2007)

Flagstar Companies, Inc. (Abridged)

by Stuart C. Gilson

Abstract

A large restaurant chain undergoes a leveraged buyout and subsequent recapitalization. Financial and operating problems at the company force it to consider various restructuring options, including a prepackaged Chapter 11 exchange offer to its public bondholders. Two investment bankers hired by senior and junior creditors present competing company valuations to the bankruptcy court that differ by $700 million.

Keywords: Leveraged Buyouts; Restructuring; Capital; Insolvency and Bankruptcy; Debt Securities; Competition; Valuation; Financial Services Industry; United States;

Citation:

Gilson, Stuart C. "Flagstar Companies, Inc. (Abridged)." Harvard Business School Case 206-076, December 2005. (Revised April 2007.)