Salvaging a Sale from a Liquidation

Restaurants, Hospitality & LeisurePerformance ImprovementFiduciary ServicesTurnarounds & Restructuring

25M

Annual Sales

18M

Debt

Mach I Foods, Salt Lake City, UT

Challenge

  • Sales volume and EBITDA had dropped from $30 million and $5 million, respectively during COVID to $25 million and $1 million post-COVID
  • PE firm had bought business at EBITDA peak during COVID; not realizing that the Company enjoyed a short-term pickup as a drive-in restaurant business during the dine-in restrictions during COVID
  • Cash Flow was insufficient to service Bank Debt and Company was delinquent making payroll tax payments
  • Lender wanted to exit as soon as possible

Solution

  • MorrisAnderson engaged as CRO
  • Cash Flow stabilized thru closure of two underperforming restaurants and cost reduction measures
  • EBITDA improved by $1 million
  • Delinquent payroll taxes caught up
  • MorrisAnderson ran a fast-track business sale process

Results

  • Business was sold out-of-court in under 3 months
  • Although the secured lender accepted a significant discount to par, the Lender avoided funding a Bankruptcy process with an uncertain outcome or a liquidation with minimal recovery
  • The majority of employees kept their jobs under new ownership

Contributors