Corporate Turnaround

Senior management recognized a need to replace their CEO, the major shareholder. Several errors in judgment had led the firm into serious defaults with secured and unsecured lenders.

The CEO responded to creditor pressure by firing or demoting longtime executives and centralizing control.

The company accelerated its decline under his control.  At the time of the initial meeting, 72 hour eviction notices were posted on 1/3 of their properties,one creditor held rights to 60% of the shares, 12 months of unpaid IRS payroll tax obligations loomed, vendors were 6 months in arrears and cutting off critical supplies, accounting was weeks behind.

We analyzed the situation, arranged the CEO’s resignation, negotiated standstill or workout agreements with all vendors, and redeemed the shares with notes.  Using an interim financing negotiated with key creditors, the firm was able to close loosing operations, and revamp others.  Within 10 months, the firm was operating at a breakeven level, and was sold to new owners.  In subsequent years the firm has continued to enjoy sales growth and profits.