Electronics Wholesaler and Retailer

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 USA, 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

Role(s)

  • CRO

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 an 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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Overview

  • Retail
  • Restructuring and Turnaround

Engagement Team