Stemming the Sudden Loss of Millions to Avoid Liquidation

Situation

A $31-million, privately held and family owned business experienced unprecedented losses over the course of a year, on top of several years of unprofitable performance. This Midwest grain mill and trading company suffered sudden, significant trading losses in a matter of a few months, which was forcing a potential liquidation of the company.

Challenges

• Millions of dollars in losses within a six-month time period.
• Owner near retirement age was unable to find a solution and needed help – fast!
• Significant overhead had been built up over the years.
• A nervous banking relationship, in addition to secured/unsecured creditors who were demanding payments.

Solution

Platinum Group was named CEO and board member, based on a referral from the owner’s insurance advisor. The company was completely restructured by spinning off the trading entity in order to focus on the core milling business. Negotiations with creditors resulted in a favorable impact on the balance sheet, including those associated with the trading business that agreed to move their accounts receivable from the milling entity to the spin-off. Several note holders and creditors forgave debt totaling more than $2 million. Platinum also brought in a short-term bridge loan and new banking credit facility, providing needed working capital and restructured the company’s operations to remove $500,000 in expenses.

Results

Within seven months, the milling company turned a profit for the first time in several years. This restructured, $10-million business continues to be profitable with the family back in control of day-to-day operations. Platinum continues to advise the owner and management team on a monthly basis.