Case Studies

Financial Advisor to UCC of Bankrupt Broom & Brush Maker

J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida

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Home·Financial Advisor to UCC of Bankrupt Broom & Brush Maker

The Situation

100-year-old family-owned maker of brooms and brushes. $25 million in sales. $10 million debt.

  • Bankruptcy was due to several factors, including increased competition, loss of several significant customers, and an unsustainable debt structure
  • Sales had fallen from $53 million to under $25 million.
  • Secured lenders believed they were under-collateralized and pushed for the immediate liquidation of Harper, refusing to provide DIP or allow the use of cash collateral.
  • Harper initially filed for Chapter 11 with the hope of reorganizing; however, the company changed course and decided to sell its assets under 363 bankruptcy protection.
  • Order cancellations and inventory issues were mismanaged, and customers were fleeing weekly.
  • Unsecured creditors are willing to forego financial consideration to preserve jobs and a customer, but need to convince lenders to allow time for a reorganization or a sales process.

How We Advised

Our experts engaged as the financial advisor to the Unsecured Creditors Committee (UCC), who were owed $4 million

  • On behalf of the unsecured creditors' committee, our experts worked with the debtor’s management team to develop a list of scenarios to achieve the greatest recovery for creditors and the business.
  • Quickly performed a financial analysis of working capital needs and determined whether the company could survive on cash collateral only, without a DIP loan.
  • Served as expert witness for the unsecured creditors committee to support the motion for the use of cash collateral to provide time to pursue alternatives to liquidation
  • Successfully won a motion to use cash collateral, providing time for the company to pursue a sales process.
  • The stalking-horse buyer was identified, resulting in the sale of the company rather than liquidation.
  • Gross proceeds from the auction increased by nearly 50% from the stalking-horse bid.
  • The company purchased and manufacturing continues, preserving nearly 65 jobs and a customer for local suppliers in a town where Harper Brush was the largest employer and enterprise.

Related Practice Areas

> 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. 

 

> 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. 

Key Contact

For additional information about the engagement or to learn more about our services, contact:

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