Skip Barber Racing School takes initiative to strengthen capital structure and fund growth
On May 22, 2017, Skip Barber Racing School LLC. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Chapter 11 allows a company to continue operating its business without the current pressure of its prior obligations. The Company plans to sell its business on an expedited basis. There are several parties interested in the Company and conducting the sale in Chapter 11 should help increase the likelihood of a sale. The Company’s strategy is to use Chapter 11 as a tool to get Skip Barber Racing School to a much stronger place.
As in the recent past, the Company’s challenges are its debt structure coupled with high operating leverage, in other words high fixed costs. This filing is a critical step in the Company moving forward with a comprehensive settlement between our Company, its major debt holders and vendors including tracks, and attracting new investment via a sale. The Company believes that earlier efforts to locate investment into the Company were hindered by its balance sheet. Consequently the Company did not have access to new capital to fund product improvements and to grow capacity. This initiative will result in an orderly financial restructuring. The entity acquiring the Company’s assets will likely have a significantly de-levered balance sheet and access to new capital. Until the sale, the Company will continue to conduct its operations as a debtor-in-possession and expects to the sales process to take approximately two months.
The Company believes that any buyer will continue to invest in the assets with a view towards strategic growth. We believe that any strategic buyer will look to honor the Company’s obligations to its customers. We want to take this opportunity, on behalf our employees and Instructors who have dealt with many challenges to thank you for staying the course and believing in our Company.
The Company operating as debtor in possession means that it operates its business in the ordinary course of business. To that end, we believe:
a) Employee pay will not be compromised and will be treated as a priority by the Court;
b) We will ask the Court for authority to treat Instructors and other critical contractors as a priority so that pre-filing amounts due may be paid as funds allow and amounts going forward i.e. post-petition will be honored again as the Company generates cash from operations; and
c) Customer deposits will be honored.
We are running programs this week and weekend at Carolina Motorsports Park and at Palm Beach International Raceway.
Thank you for your interest in Skip Barber Racing School and for your support.