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Corporate Liquidations

In today’s economic environment, businesses face a variety of critical issues. For some the issues are industry-wide where production moving off-shore has created competitive issues with devastating financial impact. Others deal with highly leveraged conditions resulting from acquisitions. Or possibly, over time the need for a specific product has simply changed. Whatever the reason, there is a point in time when, regardless of whether you are an owner or lender, continued investment just is not feasible. Should this happen and your ability to sell the business as a going concern is limited, an available option is to dispose of, or to liquidate the company’s assets. The term “liquidate” in this case simply means converting assets to the maximum level of cash. The assets may be tangible, (machinery, real property, equipment, vehicles, etc.) or intangible (trade names, intellectual property, customer lists, patents, etc.) but still represent real value to others who would view them as beneficial to their business. Proceeds from the sale of these assets are typically used initially to pay off secured creditors and suppliers, with the opportunity to provide capital to stakeholders or to fund new ventures when sufficient cash proceeds are available.

MainStream manages the sale of assets for middle market companies in a manner that yields the maximum recovery value. Often people misinterpret “liquidation” as selling items at a rock bottom price, a term that many would call “a fire sale.” At MainStream we utilize an orderly or managed liquidation process. Even when a business is distressed, following an orderly liquidation process normally yields the greatest return. An orderly liquidation is planned, controlled and moves at a pace that is deliberate and carefully orchestrated by MainStream Management. Move too fast and the organization’s loses value; move too slowly, and a similar opportunity is lost to create value. A well designed, orderly liquidation takes advantage of the very direct correlation between time and value. Our process begins with a liquidation recovery value analysis which provides an estimate of the money that will be received from the sale of the company or their assets.

Wind Down Services

There is a point in time when further investment in a company is no longer feasible. When that time occurs companies are left with few options but to sell their assets or business lines through an orderly wind-down process. MainStream specializes in exit and wind down services of underperforming companies. We work with lenders who have reached a limit in their ability to provide ongoing funds; with business owners who choose to no longer make continued investments with little or no chance of return; and with portfolio companies of private equity and venture capital firms.

MainStream has the experience, knowledge, and proven record of maximizing the recovery value from company assets for the benefit of creditors and stakeholders. Winding down an organization is complex. Dealing with creditor issues is challenging and communicating with employees requires strict adherence to specific regulations. This is no longer business as usual. Our team is experienced in these practices and is focused on mitigating legal and financial exposure of our clients.

MainStream provides full management and administration services of the wind down process with small and middle market organizations with annual revenues in a range from $20 million to $250 million. We assume interim management responsibility and advise the board of directors on required actions. Generally we manage employee terminations, creditor settlements, and benefit plan terminations as well as the asset sale and liquidation process.

The WARN Act

The Worker Adjustment and Retraining Notification Act (WARN Act) is a United States labor law enacted in 1989 to protect employees, their families, and communities by requiring most employers with 100 or more employees to provide a sixty calendar-day advance notification of plant closings and mass layoffs of employees.

Employees entitled to notice under the WARN Act include managers and supervisors, hourly wage, and salaried workers. The WARN Act requires that notice also be given to employees' representatives (i.e. a labor union), the local chief elected official (i.e. the mayor), and the state dislocated worker units.

The advance notice provides workers and their family’s transition time to adjust to the prospective loss of employment, to seek and obtain other employment, and, if necessary, to enter skill training or re-training programs that will allow these workers to successfully compete in the job market.

Often, WARN Act problems arise when employers are acquired by other companies. Generally, The WARN Act covers employers with 100 or more employees, not counting those who have worked fewer than six (6) months in the last twelve (12) month work period, and those who work an average of less than twenty (20) hours a week.

There are exceptions to The WARN Act and there are certain situations where circumstances allow for less than the full 60 calendar day notice.

Call MainStream today to speak with one of our experienced advisors. We will help you understand how the specific situations of your company may or may not be affected by The WARN act.

Bankruptcy Alternatives

For most companies, a bankruptcy filing is viewed as a last resort. Whether a bankruptcy case should be filed or not is dependent upon the specific circumstances a company faces, and needless to say no two companies are alike. This is an extremely important decision as many times the survival of the company depends on it. When making such an important decision, it is advisable for the company, its Board of Directors and its officers to seek advice from both qualified legal counsel as well as from operational and financial restructuring specialists.

Non-bankruptcy options, such as an out-of-court workout, debt restructuring, a forbearance agreement, and receivership are available. It is extremely important, however, for companies to fully comprehend that once debts begin to mount its fiduciary duties and responsibilities begin to change. Typically management has a fiduciary responsibility to the shareholders and a responsibility to act in the best interest of the company. However, when a company is teetering on insolvency, the scope of these duties changes and expands. The Board of Directors, officers and senior management must focus not only on the best interests of the company but also must take in to account how their decisions and actions impact the best interests of the creditors.

MainStream has helped numerous companies work through major operational and financial restructurings. We work in a manner that best protects the company’s assets, Officers, Board of Directors and their creditors. Call us today and let us help you think through what is best for your specific situation.

Corporate Liquidations: Projects
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