A $30-million mechanical contracting firm engaged Kinsella Group to help it determine a strategy to remain solvent and continue operating. With locations in three states, the business had $3.7 million in prior-year losses, no net worth, $340,000 in unpaid withholding taxes and its bank loan had also been called.
Kinsella Group directed the closing of two locations, negotiated continued lending under an LOC with the secured lender, reduced term debt through asset liquidations, negotiated with lenders for long-term payouts and debt forgiveness as an alternative to bankruptcy, and negotiated with bonding companies. As a result of Kinsella Group's efforts, the client returned to profitability and refinanced its debt, paying out the former lender and the IRS in full.
Faced with prior-year losses, twice the real estate required to operate its business, and declining sales threatening its ability to service its debt, a $15-million steel tube and wire fabricator turned to Kinsella Group for assistance.
Kinsella Group developed and implemented a plan to liquidate some of the excess real estate assets, refocus the company’s business activity on its highest margin products, and negotiated with the bank for sufficient time to conduct the real estate sales and reduce its debt while continuing to fund ongoing operations. As a result of these successful efforts, the company refinanced its bank debt and returned to profitability.
Following the technology downturn of 2001, a New Jersey-based IT consulting and services firm found that its earlier successes were unsustainable as the market for its services changed dramatically. During the late 1990s and 2000, top-line sales growth had fueled strong accrual-based profits; however, with an operational rather than financial focus, receivables ballooned and cash became tight. By the end of 2001, the cash situation had become dire. As contracts were cancelled and customer debt went into default, the company faced a 75% decline in sales and more than $2 million in uncollectible receivables. By the fall of 2002, under pressure from its lender, the company had filed for Chapter 11 reorganization.
Kinsella Group helped management identify and address the flaws in the company’s business model, find opportunities to generate cash and stabilize operations through balance-sheet management, and reassured senior lenders that the company was moving toward improved profitability and sustainable growth. In the summer of 2004, the client emerged from Chapter 11 as a profitable company with a new, more vigorous business model reflective of today's realities.
For a period of nine months, the entrepreneurial leader of a Florida-based regional commercial electrical contractor was inactive in the business, while recovering from injuries sustained in a vehicle accident. During this time, interim management failed to operate the business effectively, entering into major, unprofitable contracts outside of the company’s core competencies and exercising poor financial controls. By the time the head of the company had recovered, the business was in distress and the senior lender was pushing for liquidation.
Kinsella Group helped management develop and execute a plan to bring ongoing unprofitable projects to break-even status while reestablishing financial controls (including replacing the controller) and intense balance sheet management. Intelligent timing of payments to vendors with payments from customers improved cash flow. Coupled with operational improvements, these efforts convinced the lender to provide additional funding. The company, refocused on its core competencies, returned to growth and profitability.
