The Company is a steel casting supplier to a large industrial customer base and was a PE Firm orphan with no possibility of cash infusion. The company had suffered a significant decline in revenue for multiple years and had not been able to cut enough costs and has not raised prices to protect cash and profitability. Losses mounted year after year. Cash situation was critical with all purchased materials and supplies on COD or in advance terms. Vendors unsecured debt over $9M and two Banks owed $10M. Inventory levels at an all-time high.
Company had trouble meeting payroll given cash crunch. The vendor debt of $9M overwhelming with no good way to ever payoff. The bank was ready to foreclose with no options for additional cash infusion. Difficult to find skilled workforce to support customer demand. The business was definitely in need of a turnaround – quickly!
Turning Point quickly had the Company enter into a Bank forbearance agreement and aggressively utilized a 13-week rolling cash forecast to manage liquidity. We negotiated directly with vendors for deferral of old balances, and with customers for price increases and other favorable terms. We negotiated a favorable union vote for a 10% wage concession. We created a GO Forward Plan, and ultimately, we acted as CRO (Chief Restructuring Officer) to have the Company file a Chapter 11 bankruptcy to facilitate a restructuring and sale of the assets in a 363 sale. We sourced DIP financing in this process..
Turning Point’s original GO Forward plan was a success with price increases and vendor and union negotiations. We then guided the Company through a 363-sale process to sell the entire Company to a local investment firm and saved over 225 jobs! We managed the working capital closely to ensure proper payoff of DIP financing as well as ensuring assets were properly transferred to the new owner.