Case Detail

Case Summary

Flying J: Governance through Crash and Takeoff

Case Number: 5-214-252, Year Published: 2015

HBS Number: KEL887

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Key Concepts

Board of directors, Business process improvement, Cash flow analysis, Corporate governance, Crisis management, Decision making, Ethics, Family business, Leadership, Women in business


Flying J was a family-owned company that operated travel plazas, oil refineries, a bank for trucking companies, and other related businesses. In early 2009, Crystal Call Maggelet, the majority shareholder and new CEO of Flying J, was tasked with saving the company founded by her father in 1968. In the intervening forty years Flying J had grown from four gas stations to a vertically integrated $18 billion company. Declining crude oil prices, decreased cash reserves, and multiple internal challenges forced most Flying J subsidiaries to file for bankruptcy protection. This came as a surprise to the company’s lenders, suppliers, customers, and employees, who did not know the company was in trouble until it was unable to meet payroll just days before Christmas 2008.

Maggelet was determined not only to return her family’s company to profitability but also to repay all of Flying J’s debts, retain as many of the firm’s 12,000 employees as possible, and avoid compromising employees’ savings (e.g., 401K retirement accounts). All of the company’s advisors told her it could not be done. They thought a more likely outcome would be paying creditors nine cents on every dollar owed. If that happened, Maggelet’s family’s holdings would be almost entirely wiped out according to the “priority of claims” rules in bankruptcy, and the family would end up with only 1.2 percent of a restructured Flying J.

However, to the surprise of its advisors and creditors, Flying J paid its debts in full, mostly by cutting operating costs before selling assets. The family was left with a smaller, but still very profitable company.

Learning Objectives

After students have analyzed the case they will be able to:

  • Determine governance issues in family-owned businesses
  • Identify the pursuit of growth as a typical cause of bankruptcy
  • Understand why cash flow accounting is more important than GAAP accounting
  • Grasp how huge variations can occur when calculating enterprise valuations of distressed businesses
  • Understand the differences among law, governance, and ethics

Number of Pages: 11

Extended Case Information

Teaching Areas: Management

Teaching Note Available: Yes

Geographic: United States

Industry: Oil and gas

Organization Name: Flying J

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Female

Year of Case: 2009