The Receivership Obstacle Course

Owning the Obstacle Course

The death knell for a leading specialty e-commerce company was its failure to face its obstacles head-on.  Management didn’t reduce operating expenses in line with an industry-wide downturn in sales.  Lengthy litigation with its lender depleted cash flow, resulting in a bankruptcy filing that was dismissed.  The bank sought the appointment of a receiver.

Upon our arrival at the company as receiver, we quickly identified and attacked the obstacles to a speedy recovery.

Ready, Set, Sold!

In less than two months, we maximized the lender’s recovery by:

• Designing and implementing a strategy to 1) maximize cash flow and 2) preserve the company’s brand value.
• Clearly communicating the strategy so that the borrower agreed to stipulate to all sales, thereby avoiding the time-consuming and expensive process of seeking court approval.
• Staging a successful close-out sale to liquidate inventory, including odd-lots (i.e. incomplete size-runs, leftover colors, etc.), via the company’s email campaign system, resulting in sales at approximately 90% of cost vs. previous offers at 20-30% of cost.
• Running a competitive M&A process to sell the business as a going-concern, including its e-commerce site, customer lists, intellectual property (domain names, trademarks, etc.) and other intangible assets.
• Generating additional proceeds through the sale of fixed assets.

The best part?  By leveraging the company’s staff and email communications platform to stage a flash sale, we appealed to the company’s loyal customer base and human nature’s hunger for a “good deal,” while keeping the staff employed with full benefits for a longer period.