Voegele Mechanical

Division: Phoenix Capital Resources, Phoenix Management Services


Client

Voegele Mechanical was a $30 million mechanical contractor based in Philadelphia, PA.

Problem

Due to aggressive growth and a series of poorly estimated and unprofitable projects, Voegele defaulted on its loan, owed $1 million in back taxes, stopped paying vendors and threatened to stop paying its union workforce’s salaries and pensions. The Company was forced into bankruptcy by its secured lenders. Litigation was commenced on a variety of fronts that threatened to undermine the secured lenders’ security position. The situation was headed toward a long, drawn out legal fight which would have likely resulted in significant legal fees and substantial losses for all parties.

Solution

Phoenix Management Services was engaged to manage this complicated bankruptcy. The Phoenix professionals negotiated with all parties and eventually brokered a settlement in which all parties agreed to take less than what they considered the likely outcome in exchange for greater certainty of recovery. The Company emerged from bankruptcy with the assistance of the unions, lenders, vendors and bonding companies. An emergence loan was extended to the Company by a long-term industry participant who regarded Voegele’s continued existence as a benefit to the entire industry.