Bankrupt Company Sale Nets $21 Million for Owner

Hitchcock Industries

Bloomington, Minnesota

Challenge

Engaged as financial advisor. $60 million Commercial aviation component manufacturer (highly engineered aluminum and magnesium castings). $1 million – 2 million EBITDA barely covered debt service on $15 million of debt. 70-year old company, third generation family-owned; 1 plant, 250 employees


  • Aviation industry collapsed post 9/11.
  • The Company misreported AR on its borrowing base, the cash flow barely supported debt service; six months after a refinancing the company was shut down due to uncertainty of outcome.
  • Information was on two systems due to an incomplete system implementation.
  • Finance and accounting departments were weak and relatively new to the company.
  • The OLV of assets suggested a loss for the lenders; key suppliers funded a DIP loan because the parts were critical.

Solution

  • Working with management MorrisAnderson crafted a business plan that downsized revenue and improved pro forma EBITDA to $5.5
    million.
  • MorrisAnderson marketed the Company as part of a section 363 sale process.

Results

  • The successful marketing of the company produced seven purchase LOIs and four refinance LOIs.
  • The stalking horse bid of $30 million provided $5 million to equity; equity received $21 million of value from the final bid at auction of $46
    million.
  • All liabilities, including the bank debt, were paid in full.

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More

Mark J. Welch

Mark J. Welch, CPA, CTP is a Principal at MorrisAnderson based in Pittsburgh. He has over 20 years in bankruptcy and restructuring experience especially in leadership roles and fiduciary positions with clients. Prior to joining MorrisAnderson, Mark was the Director of Internal Audit at Southern Air Transport, Inc., a mid-sized cargo air-transport airline. He also… Read More