Wind Down of a Distributor with Two Foreign Operations

EB Brands

Elmsford, New York

Challenge

Distributor of giftware, exercise products and industrial gloves to mass merchants. $40 million revenue. $75 million debt.


  • Company had a significant accounting overstatement of sales and earnings, which caused the secured lenders to take over ownership of company
  • Secured lenders as owners invested $25 million of new capital to clean-up aged vendor payables and provide cash to implement a turnaround plan
  • Company’s business model was questionable as it served 3 unrelated market segments and was burdened with a costly central distribution warehouse that was 3 times larger than needed. Additionally, company’s IT and financial infrastructure were very weak
  • The Company was losing over $500,000 monthly
  • Efforts to sell the Company failed to produce a buyer

Solution

  • Company management and owners agreed the Company needed to be consensually liquidated
  • Parties agreed to use a New York State Court Receivership for the liquidation

Results

  • MorrisAnderson (MA) assumed the Receivership duties
  • MA collected Receivables at over 95%
  • MA sold all the inventory, and sold Intellectual Property rights to certain brand names for $3 million
  • MA also wound down Company operations in the U.K. generating $1 million of recovery
  • MA liquidated the Company’s China operations
  • The secured lender received approximately 50% of its $25 million in new capital in recoveries, which was almost double their original expectations

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

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

Brian Schroeder

Brian Schroeder, CPA, is an Associate Director at MorrisAnderson. Brian brings an extensive background in the accounting, private equity, and wealth management industries and uses that background as a basis to structure practical solutions through comprehensive financial analysis. Prior to joining MorrisAnderson, Brian was a private wealth analyst for BMO Private Bank, an industry leader… Read More