Leadership challenges during bankruptcy: The Revco Story

In 1985, Revco D.S., once the largest U.S. drugstore chain, had 2,400 stores, annual sales of $2.4 billion and employed 28,000 people. In an effort to maintain control of the publicly-held company, however, the leadership crafted a leveraged buyout to take the company private in 1986. The resulting $1.4 billion in debt combined with falling sales, forced the company into Chapter 11 bankruptcy in 1988, the largest leveraged buyout bankruptcy ever. Under the skillful leadership of Harvard Business School educated Boake Sells, recruited in October 1987 with no knowledge of the impending financial mess, Revco was able to re-emerge in 1992 as an independent public company and to resume its growth. In June 1997, the chain was purchased by CVS. Revco’s recovery from bankruptcy was and is often still considered the “model” of a business recovering from bankruptcy. Hear Mr. Sells discuss the complicated and unexpected leadership challenges he faced.