Daily News

View All News

Tenth-largest US staffing firm to reorganize under pre-packaged Chapter 11

April 01, 2014

The Select Family of Staffing Companies, the 10th largest staffing firm in the U.S., filed for a pre-packaged voluntary Chapter 11 bankruptcy proceeding today. The Santa Barbara, Calif.-based company says business will continue unaffected, and the move will significantly reduce its debt and provide additional capital to support future operations and growth.

No layoffs or branch closings are planned as part of the restructuring, CEO Steve Sorensen said. And the Chapter 11 proceedings could take as little as 60 days. All unsecured creditors are expected to ride through the Chapter 11 unaffected, according to the company.

Select reached agreement with more than 90 percent of its first- and second-lien lenders for the recapitalization plan. The deal calls for certain lenders to provide $225 million in new equity.

The deal will leave lenders with a majority stake in the company.

Select is now 100 percent owned by CEO Steve Sorensen and family members. Sorensen will continue to be the largest individual, noninstitutional shareholder with a minority stake after the reorganization.

Decca Consulting, an oil and gas staffing firm now owned by Sorensen independently of Select, will be acquired by Select in the reorganization. Decca provides mostly degreed engineers in the oil and gas field. It is based in Calgary, Canada.

“We believe this reorganization significantly improves our capital structure and represents the best opportunity for Select Staffing to clear a path for future growth and long-term success in an efficient manner,” Sorensen said.

“Select is a solid company, generating strong operational and financial results, having achieved a record level of sales of more than $2 billion in 2013,” he said. “During this short reorganization process, we will continue to operate the business in the ordinary course, without disruption to our business partners. Specifically, all associates, colleagues, franchisees and vendors will continue to be paid on a prompt and timely basis, and our clients will still receive the same level of service to which they have been accustomed.”

Lenders have also agreed to provide $50 million in debtor-in-possession financing. That will provide Select with ample liquidity to meet its operating expenses and maintain normal operations, according to the company.

In addition, Select anticipates having an additional $120 million revolving line of credit and a $350 million term facility upon emergence from Chapter 11.

Lenders taking part include Anchorage Capital, BlueMountain Capital Management, Pine River Capital Management and Redwood Capital Management.

Select was founded in 1985. It has a network of 312 offices in 48 states, according to a court filing. There are 167 company-owned offices and 145 independently managed franchised agent offices. It has 75,000 full- and part-time employees and 1,500 corporate and franchise employees.

Select had revenue of almost $1.93 billion in 2012, according to Staffing Industry Analysts’ list of largest U.S. staffing firms. Its main business lines include industrial staffing and office/clerical staffing.

The company was also in the news in January 2013 when it announced that it entered into a settlement with the California State Compensation Insurance Fund over an August 2011 jury verdict for $50 million in damages. Sorensen said some of the proceeds from the reorganization will go towards paying the settlement.

Bankruptcy court records report the settlement was for $25 million.

The company’s brands include Select Staffing (SelectRemedy in Illinois), Remedy Intelligent Staffing, Select Truckers Plus, Westaff and RemX Specialty Staffing. It also has divisions focused on professional development training (Power Training Institute) and a managed services program (SinglePoint Solutions).

Select is being advised by AlixPartners, its restructuring advisor; Goldman, Sachs & Co., its investment banker; and Pachulski Stang Ziehl & Jones LLP and Skadden, Arps, Slate Meagher & Flom LLP, its legal advisors.

For more information, click here, or call (877) 634-7178. Vendors and suppliers may call a dedicated hotline at (877) 785-5215. In addition, the company has set up a hotline specifically for associates at (866) 927-5795.