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Case Study

CRO: Complex Chapter 11 Reorganization

Industry
Team Size
2 Senior Managing Directors, 2 Directors, 1.5 Associates
Project Duration
10 weeks

The Situation & Approach

An iconic firearms manufacturer serving government and commercial markets, with $220M in revenues, $125M senior secured debt, and $260M senior notes was facing declining sales, a high fixed cost structure, declining EBITDA, operational and liquidity issues, and an inability to fund interest payments to bond holders.

Hired by the Board as CRO and financial advisors, the scope of Mackinac’s engagement broadened as the Company’s supply chain began to worsen and impact operations. In addition to the restructuring, Mackinac was able to lead the Company’s engineering, manufacturing, procurement and supply chain through a successful turnaround of its operations.

Implementation of lean manufacturing led to a reduction in cycle times by over 55%. Supply chain optimization decreased inventory investment by $2MM while increasing new vendor partnerships; driving down unit cost while increasing fill-rates by 350 bps. We also assisted with government contracts with entities such as the DOD and managed export/import work with Interco (International Commercial Terms) requirements, FCPA requirements and ATF approvals.

In addition, the Company executed a long-term lease for its West Hartford Facility and entered into a Memorandum of Understanding with the United Auto Workers that reaffirmed its strong relationship with the union and its workforce.

Mackinac’ bankruptcy professionals supported the executive team with cash management, bankruptcy preparation, reporting, and development of a five-year projection and turnaround business plan. Mackinac was actively engaged in the complex negotiation of a consensual plan of reorganization that allowed the Company to emerge successfully from bankruptcy in January 2016.

Services

CRO / Restructuring Advisory & Performance Improvement

Liquidity Management

Bankruptcy Services

Supply Chain Optimization

The Results

As financial advisors and CRO, Mackinac Partners helped the company improve operations, increase efficiencies and implement a successful Plan of Reorganization which reduced debt by $200 million and raised new capital of $50 million. The restructuring was completed within 10 months including the successful confirmation of a consensual Plan of Reorganization.