Interim Management and Restructuring for a Distressed Automotive Supplier
Challenge
With falling revenues, missed covenants, and a lack of informational transparency, a precision-machined powertrain components manufacturer had significantly strained relations with its senior secured lenders. In order to stabilize the business and create options for economic recovery beyond liquidation, the key stakeholders required that an immediate change be made to the company’s leadership.
We successfully stabilized the business and mitigated substantial litigation claims in the millions of dollars.
How we helped
Our company was retained in an interim role as the chief restructuring officer (CRO) to turnaround the failing company. We were able to quickly negotiate and secure interim capital support to bridge through a review of the business and establish an accurate baseline of operations, understand the realities of a sharply deteriorating backlog, and size the longer-term capital needs through a comprehensive restructuring of its footprint and cost structure.
Through the development of a long-term restructuring plan to restore the company to profitability, we strategically consolidated certain operations, conducted a wind-down and liquidation of “zombie” locations, and led insolvency filings for certain European operations with the requisite support of customers, lenders and other stakeholders. While in the CRO role, we also managed the company through the COVID-19 shutdown and restart, positioning it to emerge and immediately begin serving its customers, including tier one and OEM automotive customers in Europe and North America.
Results
Through the transparency and clarity of our plan and communications, our interim CRO was able to maintain the key leadership team throughout the restructuring process despite the instability. We successfully stabilized the business and mitigated substantial litigation claims in the millions of dollars, settling all without trials or substantial fees, thus clearing the slate going forward. We also maintained the full support and commitment of the customers, retaining them throughout the process. Additionally, we retained a full-time CEO to replace the interim CRO and provided a long-term roadmap for success and a commitment from the secured lender for more than $100 million of capital for future growth.