Case Studies

Wind-down of a Distributor with Foreign Operations

J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida

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Home·Wind-down of a Distributor with Foreign Operations

The Situation

Distributor of giftware, exercise products, and industrial gloves to mass merchants. $40 million revenue. $75 million debt.

  • The company had a significant accounting overstatement of sales and earnings, which caused the secured lenders to take over ownership of the company.
  • Secured lenders as owners invested $25 million of new capital to clean up aged vendor payables and provide cash to implement a turnaround plan.
  • The company’s business model was questionable as it served 3 unrelated market segments and was burdened with a costly central distribution warehouse that was 3 times larger than needed. Additionally, the company’s IT and financial infrastructure were very weak.
  • The Company was losing over $500,000 monthly.
  • Efforts to sell the Company failed to produce a buyer.
  • The company's management and owners agreed that it needed to be consensually liquidated.
  • Parties agreed to use a New York State Court Receivership for the liquidation.

How We Advised

  • Our team assumed the Receivership duties and collected Receivables at over 95%.
  • We sold all the inventory and the intellectual property rights to certain brand names for $3 million.
  • We also wound down Company operations in the U.K., generating $1 million of recovery.
  • We liquidated the Company’s operations in China.
  • The secured lender recovered approximately 50% of its $25 million in new capital, almost double its original expectations.

Related Practice Areas

> Receiverships 
Federal and state courts, creditors, and legal counsel choose our team to serve as Receiver of distressed businesses and real estate entities. We stabilize operations and cash flow, safeguard business assets, and pursue methods to maximize financial recovery. Our multidisciplinary team applies a wide breadth of restructuring and industry experience as Receiver to take control of companies facing financial, operational, and legal issues.

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

Key Contact

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