Case Studies
Industries: Manufacturing, Consumer Products
Primary Services: Liquidation / Business Wind Down
Our client was a Manufacturer and Distributor of Plastic Flowerpots based in Massachusetts.
Having been hobbled by years of litigation between the client, an Italian corporation (50.5% shareholder of the client) and the Company’s minority shareholder made the decision to liquidate the business through an Assignment for the Benefit of Creditors, whereby all of the ownership rights of the company’s assets would be assigned to an assignee, whose sole responsibility would be to liquidate the assets for the benefit of the Company’s creditors. Our experts agreed to serve as Assignee for the Benefit of Creditors of the Company. Two immediate issues facing the Assignee were, (a) determining whether the Company’s operations should continue, and (b) addressing potential foreclosure on substantially all of the Company’s assets by the senior creditor, which held a first lien on those assets.
The Company had insufficient capital to continue operations through the seasonal build up of inventory during the fall and winter, and through the spring selling season. In the absence of a feasible prospect to sell the Company as a going concern within the brief period before its funds were exhausted, us as Assignee determined that immediate cessation of operations was in the best interest of the client’s creditors.
During the course of the Assignment for the Benefit of the Creditors, the minority shareholder, a major creditor of the Company, moved to appoint a Receiver within the Superior Court of Massachusetts. Since we, as Assignee, had successfully wound down all of the Company’s operations and liquidated substantially all of the Company’s assets (with the exception of the Real Estate), the Superior Court of Massachusetts appointed us to serve as the Receiver. Under the Receivership, the Superior Court of Massachusetts oversaw our actions during the sale of the Company’s Real Estate, the reconciliation of claims filed against the estate, and negotiation and final resolution regarding litigation involving the client and its shareholders.
With the goal of pursuing an orderly process to maximize value for the benefit of the company’s creditors, we acted as both Assignee and Receiver with the support of the senior creditor to fund the liquidation from cash collateral.
Over the next 2 years, our experts proceeded to perform the following in order to orderly conclude closure of the Company and maximize the potential recovery to the creditors:
During the course of the assignment process, we were able to reduce the claims against the estate by 72%, while resolving numerous litigation actions against the Company without any cash payments. The final outcome of the sale of the Company’s assets and negotiation of major claims against the estate was payment in full to all secured, administrative and priority creditors, and a $0.45 dividend on the $1 distribution for the unsecured creditors. The final solution was a process that maximized the value of the recovery to the company’s creditors and provided a vehicle whereby in serving as both assignee and receiver provided significant value in the overall recovery process of the estate.
Brian F. Gleason, CTP
Senior Managing Director
Strategic Advisory Practice
+1 610 659 8118
[email protected]
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