Middle Market Restructuring Advisory Services Case Studies
Complex Financial and Operational Restructuring
A U.S. based manufacturing company in Chapter 11 engaged AlixPartners to replace its financial advisor. We quickly assessed the liquidity situation and developed a tool that enabled management to make timely decisions to maneuver through very tight periods of liquidity. Concurrently, we worked with management to develop and implement a viable business plan that incorporated significant restructuring. This plan involved several operational improvements, including selling several non-core assets, moving manufacturing to lower-cost facilities, renegotiating several IT agreements, and obtaining price increases from the majority of its customers. As a result of these efforts, the company was able to successfully right-size its business and exit Chapter 11.
Comprehensive Restructuring
A U.S. based middle market transportation company was in danger of running out of cash and liquidating, and needed help immediately. AlixPartners deployed a team of three seasoned professionals that, within a day, identified multiple opportunities to quickly improve the company’s cash position. Upon implementation, the company’s cash flow returned to positive and created the liquidity needed to properly restructure its operations. Working with management, we identified and implemented operational cost reduction actions and developed a comprehensive multi-year business plan. As a result, the value of the organization increased significantly: cash flow improved substantially, operations were properly sized for the company’s revenue and the company maintained its customer base and was poised for profitable growth.
Liquidity and Operational Assistance
A designer, manufacturer and distributor of automotive aftermarket parts was facing a liquidity crisis, and significant trade debt obligations with a key vendor were coming due. AlixPartners developed a detailed 13-week cash forecast and worked closely with the management team to develop a detailed business plan. We renegotiated the company’s trade obligations and assisted with its successful implementation of various operational improvement initiatives. As a result of the company’s improved cash management, improved operational efficiency and the renegotiation of trade obligations, it gained additional capital from its lenders and equity partners, which stabilized its operations and allowed the company to continue to execute on its business plan.
Out-of-Court Restructuring
A middle market, metal fabrication company faced a liquidity crisis and had triggered defaults under its credit agreement. In addition, the company lacked visibility into its future financial performance, could not produce reliable data to the company’s lenders, and had a private-equity sponsor with a negative equity position. AlixPartners quickly developed cash forecasting and cash management tools to gain visibility into the company’s liquidity needs, performed detailed financial analyses of the business, and provided credible information including reliable financial projections to the company’s lending group. Using this data, we assisted in renegotiating the company’s credit agreement with decreased covenant requirements and assisted management in focusing on its core competencies. Ultimately, the company avoided bankruptcy and preserved significant value for both the bank group and the private equity sponsor.
Bondholder Advisory
AlixPartners represented the secured bondholders to a multi-national manufacturer that was on the verge of insolvency. We assessed the viability of the debtor’s business plan and cash flow projections and advised the bondholders regarding the current situation, potential solutions and their related recovery. Ultimately, the decision was made to sell/liquidate the North American operations and restructure around the European operations. Our team then worked closely with the company, as the bondholder’s advisor, to implement this strategy, which included intense negotiations with the company’s customers and vendors. We also oversaw the Chapter 11 filing and ultimate sale/ liquidation of the North American operations. The recovery on the North American operations was substantially higher than the bondholders anticipated due, in large part, to the successful sale of a business, partial funding of the liquidation by the customers, and a significant reduction in expenses during the liquidation period. Equally important, the company retained all of its European customers, many of which were also customers in North America, and was able to successfully reorganize in Europe.
Secured Lender Advisor
AlixPartners served as financial advisor to the secured lenders of a company that owned and operated resorts in the United States and Canada. We were engaged by the secured lenders when the company informed them, without warning, that it would need additional funding to meet payroll and other obligations. We quickly assessed the cash flows of the company and worked with management to reduce its cash needs during this critical stage. We also assessed the company’s business plan and worked with management to identify areas for improvement. This allowed the secured lenders to make an informed decision regarding ongoing support of the company. The secured lenders ultimately supported the company, which then completed a sale of a significant asset, resulting in a full recovery for the secured lenders.
Secured Lender Advisor
AlixPartners was engaged by the senior lenders of a transportation company. The company was in financial distress and requested that the secured lenders restructure their debt and provide additional funding to the company. Facing the potential for liquidation and a significant write-off, the secured lenders engaged AlixPartners to analyze the company’s restructuring plan and cash flows, perform a valuation of the business, and assist in the debt restructuring negotiations. As a result of our work, the secured lenders were able to successfully negotiate additional funding from the company’s equity sponsor, obtain better debt restructuring terms, and avoid the liquidation of the company.