Chapter 11 / Crisis Management & Orderly Liquidations

We recognize that critical, short-term problems demand immediate answers. We can quickly assess the requirements of the situation and assemble the resources that the reorganization demands. The needs of our clients and the demands of their situations determine the nature and extent of our assistance.

In the middle of a crisis, even the best managers sometimes fail to see required actions, options and possibilities. Managers often feel the situation is insurmountable or, alternatively, that it will get better with a “business as usual” approach. Managers may be so involved with “fighting the fire” that they are unable to get to the source of the problem. Stockholder and management investment in the company justify a third party, pragmatic perspective. New, objective approaches by Whitehall management can re-energize the company.

Companies in trouble can be saved, but not without change. Making the necessary changes requires courage and commitment. Sources of weaknesses need to be spotlighted and changes must be made to maximize the company’s strengths. Whitehall will identify required changes and cause those changes to be made.

If long-term viability is a concern, Whitehall can quickly address the financial and operational viability of the business. Whitehall can then assist companies in identifying and negotiating joint venture and/or sales agreements, maximizing shareholder value.

If no viable options for business continuity exist, Whitehall staff are skilled in the orderly liquidation process, either on behalf of the secured creditor(s) or directly for the client company.

CASE STUDIES

$500 Million Publicly Held Beverage Bottle Manufacturing Company

DESCRIPTION

  • Plants in US and Europe
  • Years of loses- from $1 Billion in sales to $500 million in 5 years
  • Previous bankruptcy that did not address or fix issues
  • $235 million of debt and only $28 liquidation value- looking to close business
APPROACH
  • Took active management roles- CEO, COO, CFO, VP, Quality/Engineering
  • Stabilized customer base- Coke, Pepsi, Kraft Foods, Conagra, etc.
  • Established Wells Fargo financing plan
  • Took company thru prepackaged bankruptcy in 90 days
  • Consolidated the organization and plants improving bottom line performance and quality/delivery
  • Returned company to a positive EBITDA in next 90-120 days
RESULTS
  • Zero customer loss due to improved quality and delivery performance
  • New business opportunities were achieved and increased base business by $100 million
  • EBITDA 1st year returned to over $28 million annually
  • Successfully sold business to a strong competitor/industry leader covering most of the debt
  • Whitehall won a 2012 ML100 Award for Turnaround of the Year on this project

Tier 1 OEM Supplier of Recreational and Agricultural and Low Volume Heavy Vehicle Heating and Air Conditioning Systems

DESCRIPTION

  • Joint proposal with an accounting firm, upon repositioning of operational performance to enhance value, and ultimate yield to PBGIC in excess of conventional receivership liquidation
  • Stable company recovering from 2008 economic crisis impact upon customer base, revenue decline and cost increases
  • Placed in Receivership by PBGC as a result of parent company contribution/funding deficiencies
  • Shareholder draws coupled with declining profitability post recovery have created a less than optimal operating results and operational degradation
APPROACH
  • Review financial performance and develop operating budget reflective of present book of business and in place operating profile-a base line
  • Review primary cost drivers of material and labor for identification of areas of opportunity
  • Develop or confirm labor and overhead associated with operating profiles and opportunities related thereto
  • Evaluate personnel and systems to extent required to facilitate improvements
  • Normalize prior year results of operations to cleanse penalties arising due to lack of cash and potentially recoverable fees from parent company
RESULTS
    Operational savings were identified in several key areas, including:

     

  • Headcount reduction &- Labor Management has resulted in 25% improvement
  • Material costing and payment terms-normalized CIA to Credit for approximately 35 suppliers, progressing on pricing and prompt pay discounts
  • Price increase potential-small customers
  • Inventory purchasing strategies-reduction in on hand is occurring, approaching $100,000 reduction in live inventory on hand
  • Determine and quantify value potential differential for sale in place versus orderly liquidation at $4 million increase over liquidation before improvements and up to 8 million with operational improvements
     
    Primed lending has been put in place to facilitate future supplier terms and pricing enhancements
     
    Scrap purge has resulted in 30% recovery against first cost, well in excess of bulk liquidation of inventory

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michigan
PENNSYLVANIA

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