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Case
Study: Specialty Retail Store Chain
Turnaround Management, Bankruptcy Consulting
Company: 220 store retail "party goods"
chain
Situation / Tasks Performed: Excessive capital investments
associated with long-term business strategy decisions and a poor retail
climate led to extreme cash shortages. TRG was engaged to provide operating
analysis and to develop potential restructuring plans that would allow for
the company to return to profitability. TRG developed an operating plan
for the company that included closing unprofitable stores, shrinking corporate
overhead and reducing inventory levels through redistributing goods from
closed stores. After development of the plan, TRG worked with the company
and their equity sponsors to evaluate the strategic options available to
them.
Results: The equity sponsor, ultimately choose not
to proceed with further financing of the company. Given the substantial
delays in seasonal purchasing the bank group was unwilling to extend further
credit without sponsor support or the protection of a bankruptcy. Therefore,
it was necessary for the company to file for Chapter 11 protection. After
the filing TRG assisted the company in implementing and monitoring the restructuring
plan previously outlined. The senior secured lender agreed to provide DIP
funding and ultimately sponsored a plan for reorganization from Chapter
11.
Nature of Assignment:
Primary: Turnaround Management
Secondary: Bankruptcy Consulting
Industry: Retail
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