Case Studies

Manufacturing

Medical Instruments Manufacturer

The owner of a precision medical instrument manufacturer engaged a Gavin/Solmonese case team to act as Chief Restructuring Officer. The initial assignment was to stop negative cash flow, prepare a cash stabilization plan, identify potential strategic buyers, and negotiate a sale of the business. Once cash flow was stabilized, the case team identified several alternatives to selling the business and assisted in the sale of the company as a management buyout.

Circuit Board Equipment Manufacturer

A company that manufactured and distributed machines to imprint circuit board outlines was losing money after the meltdown in the Pacific Rim area and crash of the semiconductor industry. Unfortunately, management did not react quickly enough to the changing conditions. A situational assessment by a Gavin/Solmonese Managing Director revealed serious problems, and Gavin/Solmonese was engaged to oversee the sale of the business to a strategic buyer.

Injection Molding Company

A privately held injection and blow-molding company with annual revenue of over $100 million engaged Gavin/Solmonese to provide advisory services after the lender group realized its collateral coverage position had severely declined. Within three weeks, the G/S case team performed an assessment and presented their findings and recommendations to the Board of Directors, shareholders, and the senior lender group.

Major changes were instituted as a result, including replacing a key plant manager, deferring the payment for the main raw material ingredient (as a result of formal deferral plans with suppliers), and instituting a cash management system. The firm sought and received seasonal accommodations from its lenders, allowing it to optimize its peak spring selling season. Gavin/Solmonese was appointed CRO by the client’s Board of Directors and successfully recruited new personnel for the position of Chief Information Officer.

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Retail

Prince Sports

Gavin/Solmonese was engaged by the Official Committee of Unsecured Creditors of Prince Sports, Inc., manufacturer of world-renowned racquet-sports equipment. Working closely with committee counsel Patton Boggs, Hunton & Williams, and Connolly Bove Lodge & Hutz, Gavin/Solmonese thoroughly analyzed the debtors’ pre-petition sale and refinancing efforts and investigated their preparation for bankruptcy. As a result, we found several opportunities to not only object to the sale but also argue for an expanded process.

Gavin/Solmonese’s rapid valuation of the potential cash flow from the company’s intellectual property assets and deposition testimony drove objections to the sale process, resulting in a settlement for unsecured creditors that has provided a recovery exponentially greater than that originally proposed by the debtor and plan proponent. Gavin/Solmonese served as Liquidating Trustee, pursuing causes of action on behalf of unsecured creditors to further increase their recoveries in this landmark case.

Candy Manufacturer

Gavin/Solmonese is increasingly engaged by lender groups. In one recent situation, we advised one of the country’s largest lenders in connection with its loans to a candy manufacturer in the Deep South. The borrower had filed bankruptcy without notifying the lender, and its main shareholder was seeking to inject new funds in a dramatic move to prime the DIP lender.

Since the debtor lacked a financial advisor charged with providing profitability and cash flow analysis, Gavin/Solmonese shared its own analysis with the debtor, leading the company to shut down unprofitable operations. Gavin/Solmonese analysis and bankruptcy court expert-witness testimony successfully supported the lender’s claims, after which we helped the lender with the sale of the business assets.

Retail Giant

In the largest retail bankruptcy liquidation in history, Gavin/Solmonese serves as plan administrator, appointed by the by Official Committee of Unsecured Creditors as part of their plan.

  • Debtor was at plan confirmation.
  • Case was adversarial between debtor and committee.
  • With few employees remaining at the company and a short deadline for research, Gavin/Solmonese completed an 88-page transition punch list and located, identified, and preserved valuable data in support of the committee’s litigation against the secured lender — all within 45 days.

In this engagement, Gavin/Solmonese:

  • Closed operations at corporate headquarters on time and liquidated assets.
  • Successfully disposed of pending legal and environmental claims.
  • Supported and assisted committee counsel in innovative liquidation that has yielded returns to creditors of nearly 40% — four times the recovery anticipated under the debtor’s plan.
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Telecommunications

Cable & Telecom Company

Gavin/Solmonese advised the Official Committee of Unsecured Creditors of Broadstripe, LLC, a large regional cable and telephone provider. Gavin/Solmonese researched potential claims and causes of action against the secured lender; provided an expert report showing valuation and insolvency at the time of insider transactions; and supported committee counsel in litigation that ultimately led to a settlement accepted by the committee for multiples greater than unsecured creditors would have received under a plan.

Gavin/Solmonese was then selected to serve as liquidating trustee to rapidly distribute funds to unsecured creditors.

Optical Equipment Manufacturer

Gavin/Solmonese served as financial advisor to a fiber optics telecommunications company in Chapter 11. The Gavin/Solmonese team helped the company prepare a plan of reorganization and performed due diligence on plan viability — then presented the plan to the Creditors’ Committee and obtained their support. G/S also drew $3.5 million in venture capital equity to fund the plan, ultimately obtaining plan confirmation from the bankruptcy court.

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