Valuepart

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

Role(s)

Interim Management

  • CRO

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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Overview

  • Manufacturing
  • Interim Management

Engagement Team