IMHO BOST eventually will have to file for reorganization. Think about it for a moment. It must face a ton of variegated claims or potential claims from angry franchisees, creditors of franchisees, lenders to franchisees, investors in franchisee corporations and partnerships, local suppliers, advertisers, insurers, etc. etc. -- not to mention investors in BOST. And this is just from alleged misrepresentations, ruinous tying arrangements, poor training, and so on, arising under the old franchise system. Once BOST announced it would be taking over franchise restaurants and running them directly it only tied itself to the same railroad tracks where the lovely heroine is bound. Worse, it substantially improved chances third party creditors and claimants can show a co-principalship relationship between franchisor and franchisee making each liable for the debts of the other. From the standpoint of franchisees, it could be claimed this was BOST's ultimate motive all along in setting up the franchisees to fail a cheap takeover of the restaurants.
No need to argue whether such claims have validity either way. The point is, they will be asserted, there will be a rain forest of lawsuits which likely to spread and grow as fast as cottonwood along a creek bed, and BOST's business plans and any hope of a turn-around will be defeated at every turn unless it can put the gathering mess behind it. The only way? Reorganization or straight discharge in bankruptcy. I'm betting on the former but to investors either one is a disaster.
If you like the food, go ahead and eat there. If you like the company, don't eat the stock. It's poison. |
