Restructuring | Turnaround at initiative of bank suppliers



DEMAND: Important paper packaging manufacturer, family controlled and managed, showed a very delicate financial situation: high debts, increasing financial expenses, operating losses, etc. A bank found itself in a high-risk position, as it was the largest creditor, in an amount too large for its size, with the majority of loans granted without guarantee ("clean") or inadequately guaranteed. A judicial recovery or even bankruptcy was foreseen and probable, what would be a huge problem to the bank, which resorted to the intervention of Orchestra - Soluções Empresariais.

SOLUTION: Our team, imposed by the main creditor bank and hired by the shareholders, first diagnosed the real situation of the company, to verify the possibility of survival and to specify the managerial and organizational actions that were necessary to make this possible. The positive conclusion determined the immediate removal of the owners from management, allowing for corrective measures in the industrial, commercial, administrative and financial areas. In sequence, two of our consultants temporarily took over the management of the company for a period of 6 months, in order to implement the recommended and approved actions. With our presence and action, the creditor bank was a support for obtaining and expanding credit from suppliers, allowing for an increase in production and revenue. Quality and deadlines were once again met, bringing back traditional and important customers. Late payments started to be settled.                 

OUTCOME:  In 6 months, the bank's main objective had been fully met: with a more efficient operation and a 100% increase in sales, the company's survival was ensured, long enough for the bank to adequately back its credits with real guarantees , in addition to having reduced the bank's exposure by about 25%. With the bank's consent, management was returned to the owners.



DEMAND: Two multinational companies producing polyethylene were suppliers and lenders to a manufacturer of films and plastic bags that had just entered the preventive bankruptcy process. Its administration was very deficient, led by the founding controller. The two companies held the raw material supply duopoly, thus having the dilemma of a) continuing to supply by expanding receivables with a high probability of also becoming uncollectible, or b) cutting off supply, leading to the immediate bankruptcy of the customer, eliminating the possibility to receive arrears.

SOLUTION: The consulting structure of Orchestra - Soluções Empresariais was called by the two suppliers / creditors to assume, on their behalf and at the expense of the recoveree, the management of this company, conditioning the supply of raw material to this professional interim management. Placed the company under the general and formal command of one of our team's executive consultants, polyethylene orders were placed directly and personally by him, based on specific and confirmed sales. Within 24 hours, endorsed receivables were used to pay for the raw material received, plus a percentage to reduce the existing debt.

OUTCOME: After 12 months, the controlling shareholder insisted on returning to management, which meant the end of Orchestra‘s contract and, as a result, the interruption of the supply of raw materials. Shortly thereafter, the company was declared bankrupt and shut down. At that time, however, the suppliers' credits had already been reduced by about 70% compared to the time of assumption by our advisory team.


This news from the Feb 10/22 Journal of Commerce has brought more special satisfaction to our team because - at the time still as STRATEGOS Consulting - we were contracted by the creditor IDB (Washington) to design and structure the strategic, operational and financial recovery plan of Vinicola Aurora, which avoided the eminent disappearance of the company and promoted its perennity and value creation (our purposes), for the benefit of everyone, i.e., lenders, suppliers, employees, cooperated associates and the society.

To mention a detail, financial viability has been was built through an unusual debenture issue with 7 years of grace and 15 years of amortization, subscribed through the conversion of all bank debts ...... ie management and organization were restructured, the bank liability was extended in 22 years (a record), everyone was paid, with strategic ordering of lenders, no one lost anything, nor did it give any discount and the company is a success.

One more of our cases, as a practical example of what is and should be a business recovery, which is a strategic, operational, corporate governance and management act, supported, where necessary by legal instruments.