Case Studies

Long-Term Liquidation of Metals Foundry

J.S. Held Acquires GLI Advisors, Strengthening Our Construction Project Support Services in the Western US and Hawaii

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Home·Long-Term Liquidation of Metals Foundry

The Situation

Metals Foundry with a primary focus on Automotive Tier 1 customers. $25 million in annual sales. $7 million in secured debt.

  • Multiple years of losses and a current loss rate of $200K/month.
  • Unable to fund current payroll, and trade payables have been extended.
  • The major contract ended, and the company was unable to replace the volume.
  • Vacancies in the C-Suite.
  • IT systems have not been updated for 10 years.
  • Delayed capital projects had impacted quality and gross margins.
  • The prior consultant had lost the lender’s confidence.
  • Manufacturing had been shifted to nights, further complicating production efficiencies.
  • Owners were unable to raise additional equity.
  • It is very difficult for customers to re-source parts quickly.

How We Advised

Our experts led the Assignment for the Benefit of the Creditors to liquidate assets.

  • The company issued the WARN ACT and worked with critical vendors for raw materials.
  • Shut down and liquidation of the business were publicly announced to all parties.
  • Due to the customer demand, the company produced for 8 months during COVID-19, building inventory banks for the key customers.
  • Products immediately repriced to a minimum 5% gross margin, and all customers assessed.
  • Significant monthly surcharge plus weekly payment for all AR. All customers except one cooperated.
  • Monthly cash flow moved from $200K loss to $300K profit.
  • Owners received multi-million dollar distributions after paying all creditors in full.
  • Employees received full pay and vacation pay as the WARN ACT was extended 3 times.
  • All the customers built inventory banks and transitioned to new foundries.
  • 401K was closed out and moved to individual 401K’s
  • The real estate was sold, with the proceeds transferred to the shareholders.
  • Managed during the COVID–19 pandemic to only have 2 employees test positive, and they returned to work after the isolation period.
  • Supplies are paid for new purchases on a COD basis.
  • Key employee retention program created.

Key Contact

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

Related Practice Areas

> Assignment for the Benefit of Creditors (ABC) 
As Assignees, our financial and operational experts leverage extensive restructuring experience to liquidate assets and quickly maximize proceeds for creditors while mitigating liability and preserving jobs. Our team serves as the distressed business’s de facto CEO and CFO, taking control of operations; managing creditors, employees, and litigation; preparing for and executing the sale of business assets; and distributing proceeds to creditors pursuant to priority. 

 

> 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. 

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