Liquidating a Company Whose Time Had Passed

DistributionFiduciary ServicesTurnarounds & Restructuring

37M

Annual Sales

6M

Debt

Amstore, Grand Rapids Michigan

Challenge

Manufacturer and importer of custom fixtures and display furniture for the large retail box stores. $37 million in annual sales. $6 million bank debt. $3 million pension liability. 950k square foot, 2 level warehouse & manufacturing plant.

  • Third generation family ownership whose family patriarch recently passed away.
  • Company losing $2.3 million EBITDA annually.
  • Increased competition from Internet merchants forced mass retailer customers to close stores and downsize.
  • Inventory was at a bloated $8.2 million level with only 2x annual turnover.
  • Excessive warehouse overhead contributed to annual losses.
  • Manufacturing in this industry had moved to China five years ago.
  • Ownership had to decide whether to attempt a turnaround or liquidate the company.
  • Bank refused to extend the ABL facility to finance upcoming retail season.

Solution

  • MorrisAnderson engaged as financial advisor.
  • Completed Board of Directors assessment and presentation outlining the costs and benefits of the turnaround vs. potential proceeds from an orderly liquidation. MorrisAnderson recommended a liquidation.
  • Board decided to liquidate the company and issue the Warn Act with MorrisAnderson to manage the liquidation process.

Results

  • Morris Anderson accompanied Amstore’s salesforce on major customer visits to explain the wind down and to negotiate a major customer sourcing transition plan to protect the retailers planned supply chain in exchange for purchase of inventory in the pipeline and payment of AR.
  • Customers purchased 90% of the inventory at standard cost.
  • Customers paid all accounts receivable balances owed.
  • Company operated profitably for (3) months beyond the WARN Act notice at request of customers.
  • Employees, customers and vendors all worked together for a WIN / WIN.
  • Bank, trade creditors and pension obligation fully paid from liquidation.
  • Large plant and warehouse was sold fully satisfying its mortgage and leaving several million for the Shareholders.

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