silver lining 2

The year 2020 has been rough for business, so far.  But there is a silver lining: this is the perfect environment in which to restructure and rightsize your business.  With brand businesses everywhere filing for Chapter 11 and otherwise restructuring commercial leases and other obligations, 2020 offers the perfect cover for small businesses to do the same.

California Senate Bill 939

For California businesses, commercial lease relief looked as if it was on the way.  California Senate Bill 939, if passed, would have required a moratorium on commercial evictions as well as rent restructuring.  The entire proposed bill can be read here.   [UPDATE]: this bill subsequently died in committee and will not become law in the state of California.

Well-Known Brand Companies Restructure

Nationally, the brand leader in 2020’s restructuring frenzy must certainly be Hertz Rent-a-Car.  After filing for Chapter 11 protection in May, it immediately attempted to issue the world’s first “BPO” (bankrupt public offering) in June, hoping to raise $500 million.  While the Delaware bankruptcy court approved the financing, the SEC blocked it, since the likelihood of investors having any return on investment was minimal.

Undeterred, Hertz then moved its business initiatives from renting cars to selling its used car inventory.  It turns out that Hertz, as well as its rival Avis, actually generates a substantial portion of revenue from selling used vehicles on the open market.  And, apparently, used car sales have been more resilient than analysts had expected, driven by a combination of stimulus packages, credit availability, and continued consumer demand for automobiles.

Another brand leader in the commercial lease restructuring arena is Cheesecake Factory.  Early in the COVID-19 pandemic, the restaurant informed its landlords it would stop paying rent, since its locations were all forced to close.  Landlords pushed back aggressively, but negotiations are ongoing, with the threat of Chapter 11 filing hanging over the entire process.

The Right Time for Restructuring

Bottom line: in the uncertain environment of the year 2020, this is exactly the right time for small and mid-sized businesses to restructure their obligations and rightsize cash flow.

We are here to help.  We can help with solid strategies and strong negotiating capabilities.  We can help you achieve a business restructuring success, very often without the need for an actual Chapter 11 filing.

Call today for a free initial consultation: (213) 600-6077.

california senate bill 939