The Merit Group opened Chapter 11 on May 17, 2011, alongside related Five Star and Merit affiliates, after a leveraged Five Star acquisition strained liquidity, inventory availability and working capital. The disclosure statement put consolidated book assets at about $72.2 million, including $34.8 million of receivables and $25.1 million of inventory, against roughly $63.8 million of secured debt, about $1.1 million of priority unsecured claims and $42.4 million of trade and other unsecured liabilities. Regions Bank anchored the capital structure and provided DIP financing after the petition date, while McNair served as debtor counsel, Alvarez & Marsal as financial advisor and the official committee became a co-proponent of the liquidation plan source filing source filing source filing.

The case quickly became a sale-driven liquidation: the court approved a free-and-clear sale of substantially all assets to MG Distribution, LLC for a $46 million purchase price, later reflected as a $44.48 million net purchase price, with Regions receiving $34.41 million at closing and the estates receiving $5.75 million through sale and settlement economics. On December 16, the court confirmed the joint second amended liquidation plan, appointing J.H. Cohn LLP as plan administrator, terminating existing management on the effective date, preserving estate causes of action, and placing Regions' deficiency claim behind initial 10% distributions to convenience and senior unsecured creditors source filing source filing.