Dexter Distributing

Client

Dexter Distributing Corporation, et. al. is a large retailer of high end exotic adult products operating approximately 18 retail stores located throughout the Western United States. The Company filed a Chapter 11 petition in March, 2003 in the District of Arizona in Phoenix.

Challenge

Pursuant to a motion filed by a party in interest, a Bridge Managing Director was appointed as the Examiner by the Court and Bridge was retained as the Examiner’s financial advisor. The Examiner was charged with investigating 12 questions posed by the Court focused primarily on the issue of whether the Company’s Board of Directors had breached its fiduciary duty by materially deviating from the Company’s plan of reorganization confirmed during its earlier bankruptcy case filed in the same district and before the same Judge in 2003.

Solution

Bridge was required to analyze three years of financial information in order to track the sources of uses of funds during the three year investigation period. In addition, Bridge investigated the Company’s operational changes; stated rationale for changing its strategy from that mandated by its earlier plan of reorganization; and, efforts made by and feasibility associated with refinancing the business and other financial matters.

Results

Bridge delivered a 100 + page report to the Court which identified breaches to certain elements of the earlier plan of reorganization and negative responses to certain of the Court’s other questions.