Electronics Wholesaler & Retailer

Electronics Wholesaler & Retailer

Roles
Financial Advisor, Chief Restructuring Officer
  • CR3 collaborative approach extended runway
  • Maximized working capital turns with limited revolver capacity 
  • Stabilized deteriorating cash flow 
The wholesaler and online retailer offered general hobby products to 1,500+ independent retailers and direct to thousands of consumers internationally. The financial strain came from multiple angles and CR3 was engaged as CRO to revitalize the restructuring. Strategy implementation was completed in expedited bankruptcy process, resulting in four 363 sale transactions. CR3’s work stabilized the deteriorating cash flow situation enabling sale and transfer of company’s operations as operating entities and opposed to liquidated assets.
 

The Situation

  • Midwest-based, leveraged employee-owned wholesaler and online retailer of primarily radio control vehicles, planes, and boats plus other branded general hobby products offered to 1,500+ independent retailers and direct to thousands of consumers in U.S., Europe, and select other overseas markets
  • Refinance/capital raise efforts stalled prior to traditionally busy holiday selling season.
  • Lower inventory levels of seasonal product and limited incoming goods due to trade credit constraints and revolving credit limits; seasonal credit demands required increasing loan overadvance

The Work

  • CR3 engaged as CRO as lending group and company determined change leadership was necessary to resuscitate restructuring efforts and stabilize company during sale process
  • Began work on eve of holiday selling season to develop and implement restrained capital funded operations that would limit new bank overadvances and create stability until sale process was completed
  • Communicated with lending group to develop confidence in company’s liquidity management initiatives; worked to recover declining liquidity and working capital;
  • Assisted company with identifying responsive suppliers and hot commodities to maintain positive cash flow in effort to overcome company’s poor trade credit
  • Implementation was completed in expedited bankruptcy process, resulting in four 363 sale transactions
  • Efforts focused on maintaining operations stability and mitigating supply chain disruptions by Asian vendors while investment banker advisor converted prospects to buyers
  • Implemented actions using three-person team leveraging company personnel to accomplish results

The Results

  • CR3 collaborative approach and effective communication with stakeholders, including lending group and board of directors, influenced timing of bankruptcy which allowed more time for marketing company and bankruptcy preparation
  • In conjunction with company’s purchasing group, developed focused purchases on unique company branded products or quick moving items exclusive to company that maximized working capital turns with limited revolver capacity set by funding sources; company achieved sales plan and cash flow budget without significant disruption through holiday season
  • Stabilized deteriorating cash flow situation enabling sale and transfer of company’s operations as operating entities and opposed to liquidated assets

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