Third Generation Contractor

The Client

The Company was a third generation $16 million HVAC, Roofing and Electrical Contractor located in Delaware.

The Challenge

Absentee ownership combined with a management team that was not operationally-focused and poor financial controls resulted in the accumulation of substantial losses, the inability to identify which projects were bleeding cash, and haphazard collection efforts. The Company had recently embarked on larger scale projects without the appropriate estimating or project management infrastructure in place. This resulted in significant increases in payroll and overtime and operating losses. The Company extended its vendors, became delinquent on taxes, and eventually found itself in an overadvance position with its asset-based lender.

The Solution

Phoenix Management Services concluded that it would be unable to obtain adequate financing to support a turnaround, and that a wind down of the Company and a sale of its assets was in the best interest of its shareholders. Phoenix developed a liquidation plan, worked with management in its negotiations with its vendors and customers, and managed the orderly wind down of the business outside of a bankruptcy proceeding. Phoenix was able to negotiate a settlement of the shareholder’s guarantee that preserved their primary residence, and the proceeds from the liquidation repaid the senior lender in full.