Corporate Restructuring Services

Corporate Restructuring Case Studies

Russound Inc.

Industry:  Consumer Electronics
 
Challenge:  Business owners often wait until the last possible moment to seek help, and such was the case here. By the time CRS was consulted, Russound's revenue had declined nearly 70%, its line of credit was maxed-out and there were not enough assets to borrow against.  Refinancing was out of the question and we had a very small window of time to effect a turnaround.
 
Solution:  Negotiated new payment schedules with Russound's vendors, buying time to implement cost-cutting and revenue-generating strategies.  Took bold steps to restructure Russound's product line. Made wholesale changes to the company's vendors, manufacturers and logistics strategy. Immediately sold cash burning division.
 
Results:  Revenue is up 23% from its low with a 33% year-over-year improvement in EBITDA.  CRS successfully refinanced Russound. The company has a new product strategy that makes it more competitive. Redesigned legacy products and added new products to the line, thereby improving product selection and service, while preserving margins. Russound's restructuring has strategically positioned it in the industry, and these changes serve it well into the future.

 

Ethanol Producer

Industry:  Ethanol Production and Sales
 
Challenge:  The Company was facing a period of prolonged negative margins due to rising corn costs stemming from a drought in the Midwestern US and was rapidly running out of cash.
 
Solution:  Idled the facility, rationalized costs, and conducted a full sale process through a §363 asset sale.
 
Results:  Successfully sold the asset, which ultimately received funds necessary for retrofitting the facility, thereby improving its efficiency and enabling it to resume operations outside of bankruptcy proceedings.
Turnaround Management Case Studies

Steel Fabrication

Industry:  Steel Fabrication
 
Challenge:  The Company was in a liquidity crisis and in need of a turnaround plan.   Amounts owed to vendors were severely past due and key suppliers had stopped supplying the Company, which disrupted the production cycle. 
 
Solution:  Hired as financial advisor to serve as the interim CFO and develop a turnaround plan.  CRS developed all of the tools to drive efficiencies into the cash-conversion cycle.  The conversion cycle was key in managing creditor agreements and payment plans which provided the additional liquidity to keep materials flowing and vendors paid.  CRS provided alternative financing solutions and brought in a factoring provider, further enhancing liquidity.
 
Results:  The cash “runway” was extended from what was weeks to over one year based on the turnaround plan developed and implemented by CRS. This allowed the private equity sponsor to run a sales process that successfully divested the Company’s assets in an orderly fashion.
 

Confidential Solar Energy Company

Industry:  Solar Energy
 
Challenege:  An increasingly foreign customer base and, consequently, the loss of certain asset-backed lending led the Company to experience severe cash constraints amid the need to fund its own working capital. Without a significant cash infusion, the Company was unable to meet its short-term, necessary obligations, thus risking immediate liquidation.  
 
Solution:  Restructure the Company’s cost base and explore certain divestitures in order to sustain the Company while larger strategic alternatives were pursued.
 
Results:  A successful series of asset sales and a restructured expense base enabled the Company to seek and (pending imminent close) secure long-term funding which will enable the company to fund certain large-scale projects it was previously unable to due to the lack of adequate capital.
Chapter 11 Advisory Case Studies

Karmaloop, Inc.

Industry:  E-Commerce, Retail
 
Challenge:  After several years of rapid growth, Karmaloop was faced with the challenges of the ever dynamic retail clothing and e-commerce market. The fallout of unsuccessful ventures and its associated debt, combined with the competition from low cost behemoths like Amazon, put Karmaloop on the defensive.
 
Solution:  CRS was originally hired as Interim Chief Financial Officer and, subsequently, as Chief Restructuring Officer and Financial Advisors to navigate Karmaloop through a Chapter 11 restructuring and sale.
 
Results:  Managed substantially all of the company’s operations and guided it through a successful sale under §363 of the Bankruptcy Code.
 

Western Mass Lifecare Corporation

Industry:  Retirement Communities & Homes
 
Challenege:  Reeds Landing filed for protection under Chapter 11.
 
Solution:  Hired as financial advisor to act as the VP of Finance and manage the accounting, finance and operations functions of the facility during its restructuring and assist with the development of the Plan of Reorganization.
 
Results:  Successfully managed the company and creditor relations during the bankruptcy proceedings and oversaw the sale of the assets to a strategic buyer,  allowing the company to emerge from bankruptcy.
Interim & Crisis Management Case Studies

Sawyer Enterprises

Industry:  Real Estate Development
 
Challange:  The Company partially  opened the W Boston Hotel and Luxury Residences in 2009.  Less than a year after the hotel opened, Sawyer Enterprises filed for Chapter 11 protection.  It’s Lender, Prudential Real Estate Investors, pushed for foreclosure.  With no liquidity, the hotel had limited resources to complete a themed bar, restaurant, or complete the construction of 123 luxury condominium units.
 
Solution:  Hired as financial advisor to act as COO and Construction Manager to manage the business’s operations and oversee construction of the hotel and residences.   Also provided advisory services to oversee the sales process of the hotel within bankruptcy proceedings to ensure maximum recovery to the estate.
 
Results:  Successfully completed the construction of the hotel and residences and sold the hotel to a strategic buyer for approximately $90 million. Negotiated the retention of control over the 70 remaining condo units, which generated approximately $100 million in additional recovery.  Sawyer emerged from bankruptcy and continues to thrive today.
Specialty M&A Case Studies

Advanced Molecular Imaging

Industry:  Consumer Electronics
 
Challenge:  The company filed for Chapter 11 to preserve the value of the estate. CRS was retained to serve as the investment banker. We conducted the post-petition sales process of both the Debtors’ clinical and pre-clinical divisions.
 
Solution:  Capstone assembled a list of 58 logical prospective buyers  We reached out to each of these parties to gauge interest in purchasing some or all of the Debtors’ business/assets. CRS prepared and distributed a summary “teaser and Confidential Information Memorandum” (“CIM”) as well as developed and maintained an extensive data room. CRS conducted interviews and negotiated terms with several potential buyers.
 
Results:  Successfully sold the assets as part of the 363 sales process. All constituents received incremental value due the comprehensive process.
 

Power Producer

Industry:  Electric Distribution
 
Challenge:  Client needed to conduct full diligence on two idled plants being sold in Chapter 11 under a highly compressed timeframe.
 
Solution:  Completed full diligence on the target, including valuations, risk assessments, capacity-price projections, and integration concerns.
 
Results:  Ultimately advised client to forego trumping the stalking-horse bid, as doing so would provide inferior risk-adjusted returns.
Liquidating Trust & Litigation Support Case Studies

Lake Las Vegas

Industry:  Real Estate; Development
 
Challenege:  A luxury  resort and residence just outside of Las Vegas filed for Chapter 11amidst an immense drop in property values during the Great Recession.  As part of the Plan of Reorganization, a Creditors Trust was created to pursue certain large litigation against the owners and operators  of the Trust to recoup losses.
 
Solution:  Certain CRS professional/s manage the day to day operations and finances of the Trust and initiated over a hundred claim objections totaling more than $50M.
 
Results:  Through years of negotiation and litigation, the Creditor Trust has settled the major insider action as well as the largest class of unsecured claims and, consequently, returned a material dividend to creditors.
 

International Solar Company

Industry:  Solar Power Production
 
Challenge:  The parent of a US solar power company filed multiple proofs of claims in bankruptcy court seeking senior priority for injections of capital into the subsidiary.
 
Solution:  Analyzed myriad emails and internal communications at both the parent and subsidiary to determine whether the capital infusions should be characterized as debt or equity.
 
Results:  Successfully argued in bankruptcy court that parent-company capital should be characterized as equity, resulting in a significant increase in recoveries to senior lenders.