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Company had been in business seven years and had grown to about $7,000,000 in annual revenue with four operating offices. Business went into a free fall in which the company did not reduce expenses at an acceptable rate resulting in losses. One of the main reasons that expenses were not brought under control more rapidly was the fact that too many family members were employed at salary levels the business could no longer support. The assumption that the loss of revenue was temporary proved to be very wrong, and the company posted operating losses for several periods.


Due to the above problems, the company violated various covenants in the loan agreement with their bank. They were put in the workout group, which resulted in higher costs, considerable new reporting to the bank and restrictions on borrowings. They came to AGR Financial for assistance. We jointly worked out a plan to immediately address the imbalance between revenue and expense and deal with the bank.


Step 1

AGR Financial helped negotiate with the bank to put a plan in place to give them some temporary breathing room and avoid liquidation of the company.

Step 2

Specific recommendations were made, the most important of which were to, reduce salaries to the family and others, reduce staff, consolidate 2 offices and close another.

Step 3

AGR Financial worked with the company and the bank to restructure the debt. AGR Financial stepped in and purchased all outstanding receivables from the bank that had been financing the company. Since this was insufficient to repay all outstanding debt, the bank agreed to provide a subordinated amortizing term loan for the remainder of the debt. AGR Financial was directed by the company and the bank to make payments on the term loan out of the company’s operating cash flow.


The recommendations were eventually implemented and the company is now operating profitably at its current level of business. The bank has been fully repaid and the company is in a position to take advantage of any growth opportunities that can be developed. Covenant violations are no longer a problem since the AGR Financial facility has no negative covenants.

Business People

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