CWS 3.0: April 2, 2014

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Large U.S. Staffing Firm Files Pre-Packaged Chapter 11

It can be important for buyers to watch staffing firm finances because a bankruptcy filing could prove to be a huge disruption to the buyer. In the case of the Select Family of Staffing Companies, the company doesn’t anticipate any interruption in business, and it expects the reorganization to proceed quickly. Still, it makes for good business to keep an eye on your staffing firms’ finances, checking to make sure that things are in order. It’s not just the staffing firms’ responsibility. Being proactive saves your stakeholders a great deal of trouble.

Select, the 10th largest staffing firm in the U.S., filed for a pre-packaged voluntary Chapter 11 bankruptcy proceeding Tuesday. 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 and 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.”

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

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).

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.