Zips Car Wash, LLC (together with its affiliates, collectively “ZIPS” or the “Company”), one of the largest privately held car wash operators nationwide, announced that it has agreed to the terms of a restructuring plan (the “Plan”) with a group of its existing lenders that will strengthen its balance sheet and position the Company for stability and long-term growth. Through the Plan, ZIPS expects to reduce its debt obligations by approximately $279 million and secure $15 million of new capital to support the restructured business and future strategic initiatives.
To implement this transaction as efficiently as possible, and with the support of its existing lenders and equity holders, ZIPS filed voluntary chapter 11 cases in the U.S. Bankruptcy Court for the Northern District of Texas (the “Court”). The Company expects to emerge from chapter 11 quickly under the ownership of its existing lenders.
Importantly, ZIPS Car Wash, including its brands Rocket Express Car Wash and Jet Brite Car Wash, will operate in the ordinary course of business during ZIPS’ chapter 11 cases, with no expected changes to its retail and membership proposition. As part of its financial restructuring process, ZIPS will continue to assess its operational footprint and right-size and optimize its portfolio as part of its broader business transformation efforts.
“Today’s announcement represents a significant step forward in our efforts to position ZIPS with the necessary financial and operational foundation to drive long-term success,” said Kevin Nystrom, Chief Transformation Officer of ZIPS. “As we work with our financial partners to swiftly complete our financial restructuring, we remain wholly focused on supporting our teams and delivering the exceptional service our valued customers have come to expect.”
ZIPS has filed a number of customary “first day” motions with the Court to facilitate a smooth transition into chapter 11 and operate in the ordinary course, including continuing to pay employee wages and benefits, maintaining customer programs, and honoring obligations to vendors. To fund operations without disruption during the chapter 11 cases, ZIPS is seeking approval of a $30 million new money debtor-in-possession (“DIP”) financing package. Following Court approval, the Company anticipates the DIP financing will provide sufficient liquidity to support its operations during the chapter 11 process.
ZIPS expects to move through this process quickly and emerge from chapter 11 in approximately 2-3 months.
Additional information regarding the chapter 11 process is available at https://cases.ra.kroll.com/Zipscarwash.
Kirkland & Ellis LLP and Gray Reed are serving as legal counsel, Evercore Group LLC is serving as investment banker, AlixPartners LLP is serving as financial and restructuring advisor, and C Street Advisory Group is serving as strategic communications advisor. ZIPS has retained Hilco Real Estate LLC to assist with lease negotiations.
