A failing “better-for-you” snack foods company turned to Virtas Partners for refinancing, restructuring, performance improvement and mentoring. The company needed its new advisor to succeed in a final attempt at saving the business.
Client Background
The company had fallen behind in payments to its landlord, trade vendors, and secured and unsecured creditors. It had ceased production and shipment of product to its customers’ stores and distributors. After several starts and stops, the company had lost credibility with its customers and creditors.
Virtas Partners’ turnaround experts quickly assessed its financial condition and go-forward viability, and crafted an
achievable restructuring and turnaround plan.
Scope of Services
- Strategic improvements to simplify and streamline operations
- Focused product offerings to reduce complexity, considering each product’s profit contribution
- Restructuring—negotiated settlements with vendors and creditors
- Refinancing, including bringing in new sources of funding
- Strategic communications
Significant Milestones
- Assessed company status; prepared cash flow budget; prepared 30+ point turnaround plan. Determined that the company could survive.
- Replaced outsourced CFO; hired competent finance professional and updated incomplete financial records. Reviewed financial statements.
- Prepared for and met secured creditors. Negotiated forbearance agreements. Updated weekly cash projections. Reported financial status to the secured creditor/bank.
- Constructed an out-of-court settlement proposal for unsecured creditors. Initiated unsecured creditor plan.
- Negotiated with unsecured creditors to right-size company balance sheet.
- Negotiated with other company creditors including landlord and machinery lease holders in anticipation of continued operations.
- Secured accounts receivable factoring and purchase order financing in advance of resumed production.
- Engaged supply chain and resumed normal production.
- Prepared strategic communications plan to announce the company’s rebirth and rebuild the company’s product brand.
- Executed turnaround plan
Value to Client
- Provided hope to President/owner who thought he was out of options, including pathway to resolve financial difficulties without filing personal or company bankruptcy, and restart the business.
- Evaluated and replaced an ineffective outsourced CFO and debt placement agent.
- Renegotiated lease with landlord, reducing rent expense
- Secured new funding for continuing operations.
- Provided disciplined alternatives to help manage the business more effectively.
- Created a vision for a turnaround plan and executed the plan.
- Orchestrated a financial restructuring of the balance sheet with unsecured creditors.
- Developed a strategic communication plan for employees, vendors, creditors and consumers to restore trust and to rebuild the product brand.
- Assembled a team of outside professionals, including lawyers and brokers, to augment the Virtas effort and the likelihood of a successful outcome.