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
Overview
- Retail
- Restructuring and Turnaround