Category Archives: Case Studies

Struthers Industries

The Company

Struthers Industries

A Mississippi-based fabricator of feedwater heaters, fired heaters, and other large cylinders had been in Chapter 11 for an extended period of time.

The Challenge

The company had been in Chapter 11 for several years. As a result, sales had deteriorated substantially, many employees had left the company, and its two plants were barely operating. A conversion to Chapter 7 was imminent when Equity Partners was retained.

The Process

Equity Partners negotiated with the creditors and was given a strict deadline of ninety days to sell the assets. Equity Partners ran an extensive marketing campaign and quickly generated multiple offers for the business as a going concern and on various groupings of assets.

The Solution

There was a very lively court auction with the intellectual property selling for a seven figure value, ensuring that the estate received going concern value. Additional bidding also led to the sale of the machinery and equipment, multiple pieces of real property, and the sale of the receivables. All sales were approved by the court and closed in over the next ten days.

Tech Space, Inc.

The Company

Tech Space, Inc.

An Iowa-based manufacturer of prefabricated modular laboratories.

The Challenge

Tech Space had taken more debt than their revenue could support. They became insolvent and were nearing liquidation. They were still operating but needed a way to reduce their debt load or the secured lenders were going to liquidate the assets.

The Process

Equity Partners was retained to conduct an extensive marketing process in search of new money, a joint venture partner, or a buyer of the business as a going concern. Within three months, Equity Partners uncovered several interested investors.

The Solution

Through negotiations, Equity Partners closed a transaction, selling the company as a going concern to Artsway Manufacturing, which had purchased another Equity Partners clients in the past. As a result, the recovery was maximized in a way that could not have been achieved through a liquidation, employees were retained, and the company continues to operate.

United Support Solutions, Inc.

The Company

United Support Solutions, Inc.

A 35 year old family owned and operated precision fabrication, machining, and finishing shop in NJ.

The Challenge

The Company had grown to $15 million in annual revenue which positioned them to successfully win a five year, $37.4 million government contract. Unfortunately, after investing close to a million dollars for the startup, sequestration hit and the contract was pulled. This led to a significant cash constraint, and combined with a reduction in revenue, it became untenable for the Company to continue operations under its existing debt structure and filed.

The Process

Prior to the filing, the Company had been exploring options to partner with another group or sell the business. An offer was obtained, but without subjecting it to a market test to prove whether it was the best option available, the creditors were unwilling to agree to the sale. Equity Partners was retained and given 30 days to market the business to either find a competing bid or prove the initial bid was the highest and best offer available.

The Solution

After completing an exhaustive marketing process, Equity Partners negotiated a qualifying bid in excess of the existing bid and conducted an auction between the two groups. After active bidding and an increase of 41% to the initial bid, the competing bidder was deemed the highest and best bid. The bankruptcy court approved the sale and closing occurred two weeks later, ensuring going concern value was retained and recovery for the estate was maximized. The offer maintained operations in place and provided continued employment for over 60 people including ownership.

USI Services Group, Inc.

The Company

USI Services Group, Inc.

Family owned provider of facility maintenance, security guard and event services.

The Challenge

The company primarily worked with major retail chains and other commercial venues which required arduous insurance policies and created significant risk for the company. A failed self-insurance program crippled cash flow and as a result of its inability to pay taxes, sizeable liabilities were incurred.

The Process

With no way to satisfy the tax obligations, the company was forced to file Chapter 11. A DIP lender was secured to fund operations in bankruptcy and Equity Partners conducted an extensive marketing process. Bids were solicited from multiple groups and an auction was scheduled.

The Solution

At the auction, bids were negotiated to improve terms and price and the company chose to sell the security and facility management entities to one buyer while the landscaping and snow removal entities were sold to another. Both buyers were intimately familiar with the businesses and after a quick closing, operations continued without interruption. Employment for almost 1,800 individuals, including senior management was secured and recovery for the estate was maximized.

Victor Graphics, Inc.

The Company

Victor Graphics, Inc.

Full service book manufacturer and printer, located in Baltimore.

The Challenge

Sales had shrunk considerably as the overall printing market contracted. With significant overhead and no path to increase sales, ownership needed to explore options to either sell the business or take on a partner.

The Process

Equity Partners quickly generated 3 going concern offers each presenting different options for ownership. After several rounds of negotiations, an offer was selected that allowed for a scaled down operation to continue in place and avoid interruption for clients.

The Solution

A transaction was completed with a friendly competitor, the secured creditor was paid in full and equity holders received substantial return from the sale of the real estate. The business continued operations under the umbrella of the buyer, with previous ownership still involved.

Waterloo Healthcare

The Company

Waterloo Healthcare

An Iowa-based manufacturer of medical carts and related products.

The Challenge

Waterloo Healthcare had not invested in new product development for years and sales took a hit. Revenue declined 50% in 5 years due to the lack of new products and a manufacturing recession. The company had a large debt burden, had stretched its payables to the limit, and they also inherited several problems when they were acquired two years earlier.

The Process

Equity Partners was retained and looked for buyers for the business while also negotiating terms with creditors that would allow a transaction to be completed. Equity Partners launched an international campaign to identify all parties that could be interested in acquiring or investing in the business.

The Solution

Equity Partners quickly obtained three offers to purchase and operate the company. A transaction was ultimately structured that allowed for an asset sale to the buyer, and transfer and assumption agreement with a third party for licensing the brand name.

Waverly Gardens and Glen

The Company

Waverly Gardens and Glen

Independent living and assisted living community in Memphis.

The Challenge

Low occupancy caused this independent and assisted living company to negotiate a forbearance agreement from their bank to forestall foreclosure.

The Process

Equity Partners launched an exhaustive marketing process, seeking refinancing,  joint venture partners, or a sale of the business.

The Solution

Equity Partners secured a Letter of Intent and persuaded four other companies to compete for the community.  We brokered a deal with the secured creditors whereby the community would be sold and the owner would share in the proceeds, despite the fact that they were at high risk for not recovering their full investment.

Wright Plastics Company

The Company

Wright Plastics Company

This company had operations in Alabama and Georgia manufacturing polyethylene film and bags.

The Challenge

After spending significant capital to develop a new, state-of-the-art plant in Alabama, the company was cash strapped and had to shut down both of their plants. The challenged was exacerbated by the Georgia plant being antiquated and the Alabama plant having no sales to speak of.

The Process

Equity Partners was retained and conducted a global marketing campaign that brought written offers and deposits from eight buying groups.

The Solution

Equity Partners negotiated the sale of the Alabama plant for well over $9 million (excluding inventory and receivables). Operations were re-started and employees were able to return to work. The Georgia plant was bought by an equipment reseller, while Equity Partners simultaneously brokered a consensus among secured creditors as to how sale proceeds would be allocated and liens released.

The YMCA of Metropolitan Milwaukee

The Company

The YMCA of Metropolitan Milwaukee

A Milwaukee-based YMCA locations was looking to sell four of their suburban health and fitness facilities to a neighboring YMCA association.

The Challenge

The YMCA of Metropolitan Milwaukee wanted to focus on their inner city facilities and youth programs. It was very important to both the YMCA mission and its membership that these locations continued to operate as YMCAs. They had an offer on the table to sell the four locations to a neighboring YMCA. They met resistance from parties-in-interest who felt that there was a possibility an outside organization might be interested and/or willing to pay more.

The Process

Equity Partners was retained to quickly and thoroughly test the market to confirm that the bids in place did result in the highest and best value for the estate. Equity Partners conducted an intensive marketing process that resulted in speaking to over 150 groups (both YMCAs and non-YMCA organizations) about the opportunity. 16 outside groups proceeded to conduct due diligence.

The Solution

None of the groups that conducted further due diligence thought it made sense to outbid the offers on the table. This confirmed to all parties-in-interest that the bids in hand were the highest and best value for the estate. All sales were approved by the court and quickly closed.