Liberty Tax parent restructures after bankruptcy

Liberty Tax parent NextPoint Financial Inc. and 29 U.S. affiliates have launched Chapter 15 proceedings in Delaware, declaring $284 million in debt after seeking bankruptcy protection in Canada.

NextPoint and its subsidiaries received an initial order from the Supreme Court of British Columbia regarding the Companies' Creditors Arrangement Act.

The company's approximately 2,200 Liberty Tax franchised locations are not included in the proceedings. The company has secured a commitment for $25 million in financing that will provide sufficient liquidity to continue operations.

Luke Sharrett/Bloomberg

NextPoint has also entered into a restructuring agreement with lender groups, who have committed to purchase substantially all of NextPoint's assets for up to $281 million.

NextPoint has named Scott Terrell CEO. He previously served as Liberty Tax's chief information officer and as COO of NextPoint until his appointment as interim CEO in May.

"We are pleased to have achieved a comprehensive solution that will reduce our debt burden and put our enterprise on stronger financial footing for the future," Terrell said in a statement.

NextPoint Acquisition Corp. acquired Liberty Tax from the latter's parent company, Franchise Group Inc., in 2021. Franchise Group received some $182 million in cash and some $67 million in shares of NextPoint, a special purpose acquisition company based in British Columbia.

In 2019, Franchise Group settled with the Department of Justice and the IRS regarding an investigation into the company's compliance program. At that time, Franchise Group agreed to not rehire or engage the company's former chairman, John Hewitt, and agreed to pay the IRS $3 million.