People often ask how the wizards at Burke Capital can fix so many different kinds of companies. Maybe we’re smart or lucky, but we often improve the situation even in the rare case when we already know the business will fail. This begs the question: if we know the outcome upfront, why would we still get involved? Glad you asked.
Keep the Mice Out of the Spice
Not many businesses can survive the loss of their major customer, an 80% drop in sales and the death of the founder — all in the same year. We were called in to help a grieving widow deal with a horrible mess. Making things even worse was that the company was featured on the local TV news in a damaging story about an alleged rodent infestation. The FDA had already quarantined its warehouse, which was full of rare and exotic herbs and spices.
This was a highly charged, emotional situation, and a lot of money was at stake. Creditors, employees, and customers needed to be managed. To add insult to injury, the landlord told the company to vacate the premises in 60 days because it wanted to knock down the building – and its long-time general manager suddenly quit.
Consider the Alternatives
If you ever find yourself in a situation like this, you could simply file Chapter 7 and walk away. Or, you might want to have an experienced, independent third party take a look at things, like this company did. Our examination indicated there was a lot of untainted product that could be segregated, released from the quarantine, and sold. If we were able to manage this situation in the time allowed, we would have a chance to pay off the company’s creditors and maybe even have something left over for the widow – but we would have to move quickly.
After an initial few days of due diligence, we developed an Action Plan to generate cash by simultaneously working out an arrangement with the Feds, publishing and distributing a list of saleable inventory, cutting prices, and conducting an auction of unneeded equipment and supplies. This was not the time to worry about preserving the gross margin — we had to turn inventory into cash — immediately. We told the creditors our plan and secured their consent to a temporary payment moratorium. We met with the landlord and arranged to hold off the bulldozers for an additional 60 days at reduced rent. We settled two collection lawsuits by revealing the dire circumstances and appealing to reason. We rallied the employees and won their cooperation. We met with the company’s three largest creditors and asked them to help us by finding buyers for the products, which they willingly did. One buyer arranged to relocate the inventory to a safe location and we signed a consignment plan, so cash would continue to roll in even after the company’s doors were shut.
Cash in the Bank and Time for Tea
Although the final cash hasn’t all been counted, the bank and creditors have been paid and the now merry widow is planning to retire comfortably in tall clover. Yes, not every happy ending requires a business turnaround; sometimes you can make a wind down positive by developing and executing a good game plan.
What’s the moral to this story? If you come upon a tangled situation that looks unsolvable, call the professionals at Burke Capital Corporation. We apply all our experience and out-of-the-box thinking to every situation we encounter, because we love to overcome the expected outcome!
About Burke Capital Corporation
Burke Capital Corporation is one of the region’s most highly respected catalysts to business prosperity. For over twenty years, Burke Capital Corporation has provided capital, expertise and management to enable significant client performance gains, often in very challenging times. The company is based in Burlingame, California located at 1021 Burlingame Avenue. For more information go to www.burkecapital.net.
To learn more about Burke Capital, please contact Jim Burke at 950.579.5699 or at firstname.lastname@example.org.
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