Valuepart

Valuepart

Roles
Chief Restructuring Officer, Analyst
  • Identified profit improvement strategies 

The family-owned company provided high-quality replacement parts for off-road earthmoving equipment. The company's prior management team had mismanaged operations and perpetrated a fraud, which created significant liquidity issues and drove significant legal expenses. The company filed for Chapter 11 bankruptcy due to a revaluation of its inventory that resulted in an over-advance on the line of credit, along with pending litigation against its former manager for fraud and mismanagement. A CR3 professional as CRO leading the restructuring team implementing a cost reduction strategy and operating in Chapter 11 with only the use of cash collateral. CR3 professionals worked to solicit exit financing proposals, while crafting a Plan of Reorganization (“POR”), negotiating with the company’s secured lenders and creditors. Almost one year later, the Plan of Reorganization was confirmed. Existing ownership and a foreign strategic partner invested additional equity and a new asset-based lender structured a creatively capital structure to exit Chapter 11.

The Situation

  • Family-owned provider of high-quality replacement parts for Caterpillar, Case, Deer, and other heavy equipment dealers and distributers
  • Company’s prior management team mismanaged operations creating significant liquidity issues and driving high legal expenses
  • Company filed for Chapter 11 bankruptcy due to a revaluation of inventory resulting in an over-advance on the line of credit, along with pending litigation expenses against its former manager for fraud and mismanagement

The Work

  • CR3 professional served on CRO team and implemented a cost reduction strategy by closing two distribution centers and exiting a nonstrategic line of business
  • Negotiated a meaningful recovery for unsecured creditors, including continued use of those creditors’ goods and services to meet ongoing supply-chain requirements, which if unmet would have severely limited its exit-financing alternatives
  • Assisted company in functioning through series of contested short-term cash-collateral orders, battling for continued exclusivity
  • Worked to solicit and negotiate exit financing proposals (debt and equity), while crafting a Plan of Reorganization (“POR”)
  • Negotiated settlement agreements with company’s prior secured lenders and the Unsecured Creditors Committee
  • CR3 team managed to overcome a number of obstacles, including trailing financial performance, lack of trade-credit during Chapter 11, personnel turnover and reduced available inventory levels

The Results

  • Existing ownership and management continued to operate the company and implement profit improvement strategies
  • Existing ownership and a foreign strategic partner invested additional equity, strengthening the balance sheet
  • New international beneficial commercial supply arrangements were negotiated
  • New ABL facility provided Chapter 11 exit financing and liquidity for growth

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