Wind Down of An Apparel Wholesaler

Challenge

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Apparel Distributor. $20 million revenue. $6 million of debt.

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• Branded apparel wholesaler and retailer defaulted on loan covenants.
• Inventory was stored at two separate third-party warehouses located across country.
• The field exam revealed fraudulent reporting of collateral values on the borrowing base.
• Lender terminated the credit facility, the company abruptly shut down its wholesale business and terminated all employees.

Solution

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• MorrisAnderson was appointed Receiver to identify and sell assets to apply against the bank debt.
• Initiated communications with the wholesale customers, identified un-billed shipments and generated new invoices, and assessed value of the e-commerce business.
• Determined incremental value in operating the e-commerce retail business while seeking buyers for the inventory, the retail business, and the intellectual property.

Results

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• Located and organized the records, obtained access to the Inventory and negotiated agreements with the warehouses.
• Obtained staff to administer the business wind-down, secured and stored the accounting books and records, archived electronic data and emails, notified stakeholders of the receivership proceedings and facilitated the claims process.
• Closed on sale transactions for inventory and business, the net recovery for the secured lender achieved expectations of the initial budget.