Long Term Liquidation Where Everyone Wins

Castwell Products

Chicago, Illinois

Challenge

Metals foundry with primarily Automotive Tier 1 customers. $25 million in annual sales. $7 million in secured debt.


  • Multiple years of losses and current rate of $200K/month losses.
  • Unable to fund current payroll and trade payables had been extended.
  • Major contract ended and company unable to replace the volume.
  • Vacancies in the C – Suite.
  • IT systems have not been updated for 10 years.
  • Delayed capital projects had impacted quality and gross margins.
  • Prior consultant had lost the lenders confidence.
  • Manufacturing had been shifted to nights further complicating production efficiencies.
  • Owners unable to raise additional equity.
  • Very difficult for customers to re-source parts quickly.

Solution

  • MorrisAnderson led Assignment for the Benefit of the Creditors to liquidate assets.
  • Company issued the WARN ACT and worked with critical vendors for raw material
  • Shut down and liquidation of business publicly announced to all parties.
  • Due to the customer demand the company produced for 8 months during COVID -19 building inventory banks for the key customers.
  • Products immediately repriced to minimum 5% gross margin and all customers assessed.
  • Significant monthly surcharge plus weekly payment for all AR. All customers except one cooperated.
  • Monthly cash flow moved from $200K loss to $300K profit.

Results

  • Owners received multi-million dollar distribution after paying all creditors in full.
  • Employees received full pay and vacation pay as the WARN ACT was extended 3 times.
  • All the customer’s-built inventory banks and transitioned to new foundries.
  • 401 K was closed out and moved to individual 401K’s
  • Real Estate was sold with proceeds transferred to the shareholders.
  • Managed during the COVID – 19 to only have 2 employees test positive and they returned to work after the isolation period.
  • Supplies paid for new purchases COD.
  • Key employee retention program created.

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

Brian Schroeder

Brian Schroeder, CFA, CPA, is a Director at MorrisAnderson. Brian brings an extensive background in the restructuring, finance, 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 Read More