Chapter 11

The situation

An old line manufacturing company was plagued with diffuse ownership by creditors and untenable layers of debt from an ill-conceived recent bankruptcy. Its management had no stake in the business; the company had engaged four separate CEOs in six years. With its bank lines fully drawn, covenants broken, and no cash availability, the company found itself unable to meet its financial obligations. The bankers were about to foreclose. And a large work force across three states was bracing for a loss of jobs. That’s when management again filed for protection from creditors under Chapter 11 of Bankruptcy code.

How our professionals helped

Our professionals were introduced to management and engaged 30 days after the Chapter 11 filing. Our professionals then immediately provided full-time direction and decision-making support to the CEO and COO- taking control of financial and cash management as interim CFO. By doing so, our professionals were able to quickly generate crucial positive cash availability from aggressive management of working capital. Our professionals then drove the strategic plan for repositioning the company’s market focus, customer solutions and operations.

Implementing that plan included:

• Deep cost cuts
• Exiting unprofitable product lines
• Targeting specific high-margin growth opportunities.

Our professionals then conceived and negotiated a financial restructuring and a Confirmed Plan of Reorganization. Our professionals also drove the negotiations with equity and debt sources, managed legal and accounting due diligence, and created a competitive bidding process for the company while maintaining operations (despite financial distress). These efforts maximized value through the sale of the company as two separate going-concern divisions.

The result

Our professionals were able to achieve an operational turnaround and recapitalization of the company and created liquidity for the business. The bank was paid and the manufacturer was able to save many jobs. In the end, our professionals created a successful exit from bankruptcy protection.