Business Sale for $15 Million Using an ABC

Direct Marketing Services Inc. (DMSI)

Chicago, Illinois

Challenge

Catalog Distributor doing $150 million of sales. $25 million debt.


  • Company’s Montgomery Ward and Popular Club catalog businesses were primarily with sub-prime customers who required DMSI to provide credit, were slow pay, and whose ability to pay was affected by the recession
  • Company was losing money, and was unable to pay its vendors and bring in merchandise to fulfill orders
  • The secured lender was unwilling to continue to fund losses or fund new sub-prime receivables during a sale process

Solution

  • MorrisAnderson was hired by the Board of Directors as Assignee in an Assignment for the Benefit of Creditors (ABC) as a strategic move to push the sale process forward
  • The secured lender supported the ABC and financed the business during the sale period
  • MorrisAnderson marketed the Company and conducted a public auction which was attended by 5 potential buyers, including strategic and financial buyers

Results

  • At the auction, a strategic buyer purchased all of Company’s assets except for the Popular Club assets
  • The marketing process brought competing bidders to the table, and pushed the price to over $15 million, substantially higher than if the assets would have been sold piecemeal
  • The Popular Club assets were sold at a subsequent auction sale for $700,000
  • The majority of assets were sold in under 45 days, keeping the costs of the liquidation to a minimum compared to a Chapter 11

Howard R. Korenthal

Howard R. Korenthal is a Principal and Chief Operating Officer at MorrisAnderson. He has over 30 years of experience working with financially distressed and underperforming companies, serving in senior management, interim management and consulting roles. Howard began his career with the Big Eight accounting firm of Coopers & Lybrand in Chicago where, as an audit… Read More