Case Studies

Wind-down of Candy Company

J.S. Held Acquires Clark Seif Clark, Strengthening West Coast Capabilities for Environmental Claims, Disputes, and Catastrophe Response

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Home·Wind-down of Candy Company

The Situation

Parent company of Fannie May Candies, Fanny Farmer Candies. Manufacturing, distribution, and retail of candy. $172 million in sales. $30 million debt.

  • The Company experienced several years of revenue declines, margin erosion, and operating losses.
  • The Company had gone through two bankruptcies in three years and accumulated excessive debt through failed acquisition attempts.
  • The Company had a single antiquated manufacturing facility in Chicago, where production costs were significantly higher than industry averages.
  • The Company owned many underperforming stores in remote geographies.
  • The Company had strong union contracts in both the Chicago manufacturing plant and the retail operation, making labor cost reductions very difficult to achieve.
  • The Company was highly seasonal. Approximately 70% of revenues were generated during the four holiday periods, and significant working capital was required from April through October.

How We Advised

Our experts became CRO.

  • Created a plan to conduct an orderly sale and/or liquidation of the Company to optimize the value of each asset.
  • Outsourced product production to another manufacturer to allow for a going concern sale of the Canadian subsidiary, Laura Secord.
  • Developed a liquidation timeline to optimize the sale of inventory consistent with the seasonality of the product to optimize return.
  • Found a lender to finance the wind-down plan and eventual liquidation, which would most likely be through a bankruptcy process.
  • Launched a sale process for US-based assets that would bring a stalking horse bidder to the table at the correct time.
  • Reduced operating costs as much as possible to minimize losses while executing the plan, including layoffs, union concessions, closing of nonperforming retail stores, and consolidation of the product line.
  • Closely coordinated all activities to optimize total recovery.
  • Secured financing for the sale/liquidation plan.
  • The inventory was 100% sold during the Christmas period and the following January.
  • The announcement of closing created a “run” on the product, and all inventory was sold at full retail. That gained an additional $5-7 million for the estate over estimated recoveries.
  • Sold Canadian subsidiary, Laura Secord, as a going concern business, based on having a proven source of continuing supply, at a price that exceeded valuations by $8 million.
  • In the auction of US assets, the proceeds exceeded the stalking horse bid by more than double.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Out-of-Court Wind-downs 
We deliver strategic guidance through the wind-down of business operations or underperforming assets, helping preserve value and reputation while avoiding the disruption, cost, and public scrutiny of formal bankruptcy. Our expert financial and operational advisors apply decades of experience providing exit solutions across a wide range of industries and complexities to deliver, and often execute, comprehensive solutions for distressed businesses. 

 

> Chief Restructuring Officer (CRO) and Interim Management Services 
Our experienced C-suite interim executives advise and support companies in financial distress, experiencing hypergrowth, or that are challenged by critical vacancies among senior leadership. Whether the leadership void results from operating challenges, a recent officer resignation, the need for added support during busy periods, or during an extended job search for the right permanent hire, our experienced executives provide immediate relief and value. 

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