A Win-Win Liquidation

Motorcycle Dealership – Winddown and Receivership (2019- 2020)

Outcome:

5 Senior Lenders Paid off, Landlord paid off, Significant payment towards remaining Obligations

Tools used:

Winddown / Receivership / Lead team for Purchase and Sale of Assets Detailed Forecast, Cash Collateral Budget, Borrowing Base Certificate, Business Valuation

Turning Point Team:

Eric Camm, Bridget Savage

Turning Point was engaged to evaluate several motorcycle dealerships that were suffering from financial losses. The businesses had been purchased a few years earlier and the owner was struggling to balance the management and operations of the dealerships with a full-time career.

Actions:

Turning Point immediately built a comprehensive model and forecast for the business, showing the necessary capital infusion to restructure the businesses and bring them back to profitability. After it was determined that the capital required to weather the down months in the business cycle (winter months) would not be infused, Turning Point worked with the owner to effectuate the immediate winddown of the businesses.

Outcome:

Once the winddown began, Turning Point worked closely with the secured creditors to ensure maximum value was recovered for the collateral. At the same time, Turning Point began sourcing potential buyers for the Dealerships, as they had good locations and goodwill associated with them. Turning Point ultimately found a buyer for the largest of the Motorcycle dealerships, negotiated a Purchase Price, and assisted with the requisite due diligence.

Key Takeaways:

Once the parties had executed a detailed Letter of Intent, Turning Point was appointed as a general receiver for the dealership, finalized the Purchase and Sale Agreement, and Executed the definitive documentation with the buyer. The deal ultimately closed with the Creditors receiving a significant paydown of liabilities above what the initial liquidation value of the business was. In addition, the quick turnaround enabled numerous jobs to be restored and for the dealership to reopen to the general public.