Bridging HVAC Company to a Sale Transaction

Ridgewood Corp.

Ridgewood, New Jersey

Challenge

$25 million plumbing supply company and HVAC distributor. $5 million debt.


  • Company saw revenues drop 40% over a two year period.
  • Gross margin dropped 4% due to inefficient purchasing.
  • Ineligible Accounts Receivable reached 43% of outstanding A/R.
  • $2.5 million invested by ownership used up in a year to fund losses.
  • Forced liquidation values showed a 60% loss for senior bank.
  • Negotiated sale of business almost derailed by competitors holding unsecured claims filing Involuntary Bankruptcy petition.

Solution

  • MorrisAnderson engaged initially as financial advisor, transitioned to interim management and investment banker.
  • Negotiated additional terms with key vendors.
  • Identified buyer, negotiated APA and sale of company.
  • Sale conducted outside of Bankruptcy, until forced into Bankruptcy proceedings and then sold through §363 sale process.

Results

  • $2.6 million of inventory sold through consignment plan using eventual buyer to manage the process.
  • Overall recovery increased 100% over liquidation through sale and organized liquidation efforts.
  • Company survived what would have been a liquidation and 50 employees found employment with the new company.