Situation Encountered Upon Engagement

The company was losing over $500K per month and requiring regular and substantial cash infusions from its private debt and equity sponsors, who were investing cash to keep the company afloat until it could be sold.

Sues was retained to manage and improve the cash flow situation until the company could be sold. However, Sues quickly determined that it was infeasible for the company to be sold outside of a Chapter 11 process, because the sale proceeds for the company would not be sufficient to pay the debts of the company. Sues also advised the private debt and equity sponsors that, outside of a Chapter 11 process, their cash infusions were at risk of being subordinated to trade creditors.

Major Actions Taken by Sues & Angart

  1. Immediately improved the cash situation through the development of a cash flow forecast, revision of the company’s disbursement management processes and improved communication with trade creditors.
  2. Prepared a Chapter 11 filing in a planned, coordinated and organized manner, thereby insuring the efficiency of the process and minimizing the impact on  business performance.
  3. Arranged and negotiated DIP financing.
  4. Negotiated the Stalking Horse Asset Purchase Agreement and conducted the bankruptcy sale process and auction.
  5. Worked with all constituencies, Including secured creditors, the Creditors’ Committee, lessors, subordinated debt holders and equity to conduct an efficient, consensual Chapter 11 sale and confirmation process.
  6. Negotiated and resolved all Chapter 11 claims, inter-creditor issues, preferences and other contested matters.
  7. Developed and confirmed the Chapter 11 Plan of Liquidation.

Key Results Obtained by Sues & Angart

  1. Sold the assets of the company for $15 million within 8 weeks of the Chapter 11 filing date.
  2. For the eight weeks operating within Chapter 11, managed cash so effectively that cash flow exceeded budget by $1.4 million.
  3. Obtained a recovery for unsecured creditors in excess of 25%.