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Financial Advisor to Bank Regarding Luggage Wholesaler

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Home·Financial Advisor to Bank Regarding Luggage Wholesaler

The Situation

The company began experiencing large operating losses and became over-advanced on its loan.

We were retained by the company’s secured lender as its Financial Advisor to assist in restructuring the company’s $25 million line of credit.

How We Advised

Our experts provided key information and advised its bank client on restructuring a $25 million line of credit to a luggage wholesaler.  We uncovered the following information, enabling our client to successfully secure additional collateral and improve its recovery:

  • The company’s projections dramatically underestimated the reserve for Returns and Marketing Allowances for several major customers, resulting in an overstated Net Income and Cash Flow by 100%, or $1 million.
  • Our assessment of collateral quality identified approximately $1 million of assets held for investment purposes that had no value.
  • We discovered that the sole shareholder had purchased a yacht for $700,000.

Obstacles & Our Solutions

  • Management was unwilling to discuss or provide information regarding the company’s agreement.
    • Our team worked around management by befriending lower-level accounting and sales staff to obtain agreement.
    • We discovered that a company did not always abide by its agreement governing purchases of the product. Contrary to the provisions of the agreement, they insisted on unlimited rights to return product after the season and on excess advertising allowances.
  • The company’s financial advisor was slow to prepare updated projections
    • Our experts worked directly with the company’s controller to build our own financial model.

Key Contact

David Stapleton, CPA, CLPF 
Senior Managing Director 
Strategic Advisory Practice 
+1 213 235 0601 
[email protected] 

Related Practice Areas

> 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. 

 

> Bankruptcy Advisory 
Navigating bankruptcy is inherently complex, often involving struggling businesses, litigation, incomplete or inaccurate financial records, potential fraud, and other challenges, in addition to strict court-mandated processes. Our experienced team of turnaround and restructuring experts seamlessly guides clients throughout the process to optimize outcomes for lenders, creditors, shareholders, and employees. 

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