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Mike Caruso
Senior Director, Other Professionals
With financial and operating experience spanning over 30 years, Mike Caruso is a proven problem-solver with the ability to quickly adapt to different environments and produce quantifiable bottom-line results.
Tom S. O'Donoghue Jr.
Partner, Partners
Tom O'Donoghue offers a special perspective and deep understanding of business needs and objectives from serving numerous businesses as a turnaround manager, financial advisor, investor, and corporate executive.
Barak Tulin
Partner, Partners
Barak Tulin is a creative, analytical, and effective executive with over 20 years of experience in performance improvement, restructuring and turnaround, financial planning and analysis, transaction services and general management.
- Negotiated guaranteed recovery
- Avoided liquidation
The company is a family-owned retailer of specialty gifts with 86 locations in the northeastern U.S. The company’s term lender engaged CR3 to evaluate its position before and during the company’s Chapter 11 bankruptcy filing, in which the company agreed to sell itself to a stalking-horse bidder comprised of company management and one of the company’s landlords. CR3 assisted the lender in developing a strategy to competitively bid against the stalking-horse bidder to increase the lender’s potential recovery. Ultimately, CR3 succeeded in helping the lender receive a higher recovery from the stalking-horse bidder without having to bid successfully for the assets.
The Situation
- Family-owned retailer of specialty gifts with 86 locations in the northeastern U.S. and over 2,000 employees
- Company had funded a growth plan by taking on outside investors and raising additional funding
- 2020 sales were negatively impacted by COVID-19 pandemic, which generated significant P&L losses and reduced company’s ability to service its debt
- As a result, company filed for Chapter 11 bankruptcy with goal of selling itself as a going concern to a group of company’s insiders and one of its landlords
The Work
- Financial advisors to company’s term lender
- Assessed company’s bankruptcy plan and financial projections
- Assessed company’s sale strategy and liquidation analysis to determine range of lender’s potential recovery in a bankruptcy sale process
- Commissioned an alternate liquidation analysis from an outside party to determine range of recoveries in a liquidation and calculated range of cash flows
- Assisted lender in mounting a rival bid for assets in which lender would fund a liquidation with an outside party and receive a potentially higher recovery than it would from stalking-horse bid
- Provided financial analysis and strategic counsel before and during negotiations between lender and company’s stalking-horse bidder
The Results
- Stalking-horse bidder agreed to provide a guaranteed recovery to lender in exchange for exiting the bidding process
- Lender received a recovery within the range estimated by CR3 and without the risks of a liquidation
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