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

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