Restructure Case Study

Publications Printer

This publications printer provided electronic prepress, web offset printing and binding, and postal distribution services out of a 240,000 sq. ft. facility located in a small community in the Northeastern area of the United States. The second-generation owners of the company had established a Board of Directors consisting of themselves and three independent directors and engaged an experienced CEO to run the business.

The new CEO was unable to correct recurring operating losses and actual results continued to miss the financial projections provided to its senior lender. The senior lender engaged Cedar Croft Consulting to perform a Rapid Business Assessment to review the company’s business operations and comment on its business plan. Within two weeks Cedar Croft completed its assessment and reported that:

1. There were significant deficiencies in the operating processes, including a bottleneck in the binding department.
2. ‘The sales backlog contained many projects that were heavily discounted and unlikely to be completed at an acceptable profit.
3. The company could not be profitable without restructuring its operations and reducing costs.

The senior lender shared Cedar Croft’s assessment report with the company’s Board of Directors. In order to maintain the continued support of the senior lender, the Board terminated the CEO and engaged Cedar Croft Consulting as Chief Restructuring Officer.

The Cedar Croft team moved quickly to restructure the operating processes, reduce overhead through significant headcount reductions, and cull unprofitable projects from the backlog. After two months the company began to operate profitably.

Throughout this time, Cedar Croft also managed the cash flow, negotiated with vendors through an unofficial unsecured creditors committee, and provided weekly updates to the senior lender and the Board of Directors. When it became apparent that the company and its owners did not have adequate liquidity to sustain the turnaround and address the company’s significant liabilities, the Board authorized Cedar Croft to engage an investment banker to identify and pursue opportunities to sell the business.

The company was ultimately sold to a strategic buyer outside of bankruptcy and with the approval of all creditors. The business continued operating and providing a significant amount of employment to the local community.