UNITE HERE Local 11 Releases Open Letter to Atlantic Street Capital Investors Regarding Zips Car Wash Bankruptcy

LOS ANGELES--(BUSINESS WIRE)--UNITE HERE Local 11 released a letter to Atlantic Street Capital investor because they have invested in one or more private equity funds raised by Atlantic Street Capital (“ASC”) and should ask ASC questions regarding the recent bankruptcy of ASC portfolio company Zips Car Wash.

ASC acquired a majority stake in Zips Car Wash in May 2020 through ASC IV, and along with investment from Northleaf Capital Partners, acquired the remaining common equity from existing owners with lead investor ICG and other ASC IV LPs, management and minority owners in 2022. Unknown ASC-controlled entities made multiple liquidity infusions totaling $38 million from July 2023 to March 2024 and contributed an additional $30 million in equity financing as part of lenders’ commitment to extend Zips’ loan maturity to December 31, 2024.

Under ASC’s ownership, Zips acquired 95 additional locations, nearly doubled its annual revenue from $184 million to $345 million and assumed $654 million in debt and $300 million in preferred equity before filing for Chapter 11 bankruptcy in February 2025. In bankruptcy filings, Zips stated that substantial funded-debt obligations and maturities, macroeconomic headwinds, competitive pressures and burdensome lease obligations “constrained Zips’ financial condition and ability to grow.”

Zips further reported that recognizing these headwinds, it “negotiated savings with its vendor partners and optimized on-site labor and consumable spend.” According to Aquashine Express Car Wash Chief Operating Officer Keith Lawrence, Zips’ “mission was grow as fast as possible.” Lawrence stated that Zips cut labor costs by firing “all the directors and all the opps team.” According to Lawrence, “Site managers were often working alone, or with one, two or three employees max on the schedule. We’ve had a lot of their people come to us and ask for jobs.”

ASC funds’ equity stakes appear to have been wiped out when Zips emerged from bankruptcy on May 1, 2025 under the new ownership of its lenders. Before filing for bankruptcy, Zips had 260 locations. Following reorganization, it will have 230 locations.

The letter encouraged investors to ask:

• What did Zips do to “optimize on-site labor” before filing for bankruptcy? How much did Zips reduce labor costs, how many workers were fired and did they receive severance payments?
• How much did ASC investors lose as a result of the Zips bankruptcy?
• How much did ASC earn in management fees, carried interest, transaction costs, operating advisor fees and any other fees connected to Zips?
• How many workers were laid off as a result of the bankruptcy, and did they receive severance payments?

UNITE HERE Local 11 is a labor union representing over 32,000 hospitality workers in Southern California and Arizona who work in hotels, restaurants, universities, convention centers, and airports.