MorrisAnderson Chapter 11 Liquidation Turned into Successful Plan of Reorganization
400M
Annual Sales
100M
in Debt
Parmalat, Wallingford New Jersey
Challenge
$400 million milk producer in NY/NJ – subsidiary of Parmalat S.P.A. $100 million loan to Parmalat USA, with funds upstreamed to parent. Company filed for bankruptcy following parent’s bankruptcy filing.
- Milk producer went into bankruptcy along with its European parent.
- Bank risked losing a significant portion of $100 million senior stake due to strong opposition from other lenders who preferred liquidation to an equity stake.
- MorrisAnderson’s analysis uncovered various errors in company’s forward looking assumptions that would significantly impact and undermine Bank’s position.
- Potential fraudulent conveyance allegations by UCC could impact Bank’s payout significantly to below that of unsecured creditors.
Solution
- Company sold or closed all non-core assets.
- New management team renegotiated contracts with major supermarkets.
- Settlement negotiations with UCC resulted in fraudulent conveyance allegations dropped, preserving senior position for Bank and with higher payout to unsecured creditors.
- Other senior lenders bought into the reorganization plan instead of liquidation.
Results
- Company emerged from bankruptcy and is performing better than plan.
- Bank likely was repaid their investment.