Plastic Resin Manufacturer

Phoenix successfully sells the assets of a plastic resin manufacturer resulting in the continuation of business and retention of the workforce.

The Client

Phoenix’s client was a privately-held Plastic Resin Manufacturer with sales of approximately $60 million. As a result of an economic downturn, sales had fallen to approximately $40 million two years later creating significant cash flow pressures on the business resulting in the Company defaulting on its $10 million of bank debt.

The Challenge

Faced with the inability to refinance the debt or attract new capital in order to remedy the problem, the owner made the decision to sell the business through a 363 bankruptcy process. Having marketed the Company and received an offer to acquire the assets, the Company was preparing to file bankruptcy without having arranged DIP financing, nor preparing an adequate cash flow forecast and other analysis to support the use of cash collateral. Filing in such a manner typically is not advisable, as it often leads to the Debtor’s inability to fund normal and necessary operating expenses, while also creating unnecessary tension between the Debtor and the other interested parties. Fortunately, Phoenix was engaged a few days before the intended filing date and we were able to support the Company with a professionally prepared bankruptcy filing.

The Solution

Working with the Company’s owner, management, and the lender, Phoenix recommended delaying the filing until the proper analysis could be prepared in an attempt to negotiate a DIP facility with the lender. Within four weeks of being engaged, the DIP facility was successfully arranged to fund the Company through the bankruptcy process and the case filed.

In addition to the above, Phoenix also:

  • Prepared the required schedules in support of the first day motions and other filings required by the court
  • Advised management on the necessary changes to their accounting system and procedures in order to properly report to the bankruptcy trustee and other constituents throughout the process
  • Maintained communication with the lender throughout the process including preparing a weekly scorecard comparing actual results to the agreed upon budget filed with the court
  • Assisted management with preparing information for the unsecured creditors’ committee, and other negotiations with the committee
  • Assisted in negotiations with the interested buyer resulting in an asset purchase agreement that established a baseline stalking horse bid for the 363 auction process
  • Assisted management and the lender in negotiating with potential bidders, evaluating alternative offers, and coordinating the buyers’ due diligence effort
  • Coordinated the closing of the transaction with the winning bidder
  • Prepared analysis and schedules relevant to the buyer’s claim for post-closing adjustments, and assisted in the negotiation of a settlement of the claims

The result was a successful sale of the Company’s assets within 60 days of filing, continuation of the business, and retention of the workforce.

Phoenix Turnaround

Primary Industry

  • Manufacturing

Secondary Industry

  • Chemicals

    Primary Services

  • Crisis ManagementBusiness / Operational AssessmentsFinancial ForecastingStrategic AdvisoryBankruptcy Advisory