Managing Liquidity and Bankruptcy and Executing a Successful Sale
After a weak 2016 Q4, a $1.5B outdoor products retailer with more than 160 retail locations across 27 states was struggling as a going concern, unable to fund interest payments and pay lenders, and management was forecasting running out of liquidity in less than 5 months. Two lenders were already advancing a combined 102% of NOLV for inventory, and equity holders were unwilling to contribute capital. The Company had 85% of their sales concentration in brick-and-mortar retail, with the remaining 15% coming from e-commerce and catalog. Mackinac Partners (acquired by Accordion in 2021) was engaged by the Company’s secured lenders to advise regarding alternatives.
Strategic Business Assessment
- Sensitized cash flow forecasts and worked with the Company to develop a disbursement strategy to preserve liquidity.
- Helped evaluated the sales process and timeline to ensure the Company and lenders were aligned.
- Reviewed strategic options with the Company with a goal of creating additional runway, including vendor management, store closings, and bankruptcy filing timing.
- Advised on key components of stalking horse and agency agreement submissions specific to large scale retail liquidations.
- Supported the auction process with bid valuations, term negotiations, and strategic oversight.
- Ensured that the bankruptcy filing and stalking horse process occurred in a timely fashion.
As a result of our work, the Company had successful liquidity management, a successful bankruptcy filing, and an orderly liquidation/sale returning full value to secured creditors and over $20MM in additional value above the stalking horse bid.