Problem

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A $70 million company had been mismanaged for a number of years and sustained losses over a period of time. A new management team came in and attempted to deal with a myriad of problems. These included low gross margins, structural issues, customer credit issues, poor back office systems, lawsuits, and high costs. Despite efforts to deal with these issues, the situation deteriorated and management was continually in crisis mode, going from one fire to another.

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Analysis

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Management needed time to deal with the problems in an orderly manner. AGR Financial worked with the company to help solve the issues, the most pressing of which was a lack of liquidity.

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Solution

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Step 1

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The company declared Chapter 11 in order to get time to implement a plan.

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Step 2

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AGR Financial provided a DIP financing (Debtor in Possession) to provide funding to the company during the bankruptcy period.

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Step 3

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The team worked to develop a restructuring plan that was acceptable to those involved.

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Step 4

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The plan was presented to the Bankruptcy Court and Trustee and eventually accepted. It called for selling a considerable portion of the assets to a new, non-related company. The remainder of the assets were sold in an orderly manner to repay claims and the original company was liquidated.

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Results

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A new company was formed out of the ashes of the old one. AGR Financial supported this company through a working capital facility that provided funding for their accounts receivable. The company grew rapidly, went public, and currently has in excess of $100 million in sales.

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