Restructuring and Dispute Resolution case study: Costume company transaction
Representative of unsecured creditors and asset sale
Manufacturing – Costume manufacturer and distributor
With margins shrinking and having unsuccessfully refinanced debt with multiple lenders, a leading costume manufacturer and distributor feared that they would have to close their doors forever. The impact of the coronavirus pandemic further complicated their financial position, so they filed for protection under Chapter 11 of the U.S. Bankruptcy Code. CohnReznick was referred to this case by a member of the committee and an attorney representing the unsecured creditors.
WHAT WE DID
CohnReznick and CohnReznick Capital served as the financial advisor and investment banker to the official committee of unsecured creditors in the company’s case. CohnReznick and CRC worked with the debtor’s management team and their financial advisors to assess the viability of the debtor’s businesses as a stand-alone company or through a sale with additional equity infusions.
Through a successful 363 sale process (named after the Bankruptcy Code section that allows a debtor to sell its assets), the company was sold to a new operator, positioning it to continue for years to come. Had the company been forced to shutter its doors, general unsecured creditors would have received zero recovery. Based upon the successful sale of its assets, general unsecured creditors could receive as much as fifty cents on the dollar.Following the completion of the sale, CohnReznick is now serving as plan administrator for the company.
Kevin Clancy, CPA, JD, CIRA, CFF, Global Director, Restructuring and Dispute Resolution