Shapes/Arch Holdings LLC

Division: Phoenix Management Services


Shapes/Arch Holdings LLC was a $300 million holding company based in Delair, NJ with four operating subsidiaries: · Shapes, LLC ”“ a manufacturer, fabricator and distributor of a broad array of customized, large profile aluminum extrusions; · Delair LLC ”“ a manufacturer of maintenance free aluminum fence systems as well as one of America’s most recognized brands of above ground pools; · Accu-Weld LLC ”“ a designer, manufacturer and distributor of high quality made-to-order vinyl, residential windows and steel entry doors; · Ultra LLC - a leading supplier of value priced, globally sourced hardware products.


Softness in the trailer, truck body and railcar sectors ”“ the largest customer segments of Shapes, as well as the lack of consumer confidence and crisis in the housing industry ”“ both of which directly impacted Accu-Weld and Ultra, were largely responsible for weak operating performance in 2007 ($3.2 million of EBITDA versus $20.6 million in 2006) and an increasingly strained liquidity position. After several failed attempts to sell the company and raise fresh capital, Phoenix was engaged in January 2008 to quantify the estimated cash requirements during the first half of 2008; to review the longer term financial forecast; and to outline and recommend strategic alternatives to the Board.

Phoenix determined that the Company would need the Bank Group to support approximately $7.4 million in excess of its borrowing base at its peak requirement during the 1st half of 2008, and when the Bank Group expressed its unwillingness to provide this support, the Company re-accelerated its efforts to consummate a sale of the Company. On March 16, 2008 Shapes/Arch and affiliated entities filed its plan of reorganization with affiliates of Versa Capital Management, Inc. as Plan Funder and a DIP Lender.


Phoenix served as the Restructuring Advisor to Shapes/Arch throughout its Chapter 11 cases, and helped usher the Company to a successful emergence by providing critical support in the following areas:

  • Developed, Maintained and Updated Rolling 13 week cash flow forecasts and scorecards
  • Developed a detailed and comprehensive liquidation analysis that conclusively demonstrated a shortfall to secured creditors in the event of a liquidation
  • Assisted in the negotiation of several DIP financing agreements, 2 plans of reorganization and multiple disclosure statements
  • Consulted with and advised the Debtors’ managers and officers on various operational, financial and management issues during the cases
  • Spearheaded the interaction with a diverse constituent base that included the financial advisor to the Creditors’ Committee as well as HIG and its financial advisor
  • Interacted with the Bank Group with regard to availability issues, forecasted cash flow, weekly scorecards and other funding and availability issues
  • Performed exhaustive, detailed review of all administrative and priority claims and coordinated debtors’ approach to identifying and resolving disputed and duplicate claims
  • Spearheaded and developed the schedule of contracts for each Debtor along with contract cure amounts
  • Assisted with the negotiation regarding the Emergence Funding Cap, and developed, maintained and updated the estimated sources and uses of funds at emergence
  • Spearheaded the due diligence effort by potential bidders in connection with the competitive plan process
  • Prepared Schedules and SOFAs

Ultimately, affiliates of HIG replaced Versa as Plan Funder and DIP Lender, primarily due to a 10x larger pool for unsecured creditors and more favorable financing terms, and a competitive process whereby HIG would serve as the stalking horse bidder was implemented. After renegotiating several union contracts and resolving some very complicated environmental issues, the HIG-sponsored Plan was confirmed on July 22, 2008 and Shapes/Arch emerged from bankruptcy protection on August 8, 2008. The final outcome was payment in full to all secured, administrative and priority creditors, a minimum fund of $5,000,000 for unsecured creditors, and the preservation of almost 1,000 jobs.