Franchise Services of North America Inc. (FSNA) has announced that it has filed for Chapter 11 bankruptcy protection on June 26 in the federal bankruptcy court in Mississippi. According to the company, it did this to best preserve the value of its assets for the benefit of creditors and shareholders.
FSNA is the holding company for operating entities that own several car rental brands — including the U-Save brand — whose associated independent operators have more than 650 locations across the U.S. U-Save Holdings and its subsidiaries have not filed for bankruptcy.
FSNA 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, according to the company.
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.
FSNA’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 those fees and expenses associated with these actions pending with Macquarie and its associates in multiple jurisdictions — have impacted FSNA’s liquidity, strained the company's ability to operate, and necessitated that the company seek bankruptcy protection, according to FSNA.