Case Study: Guilford Mills Corporation

Description:
Guilford Mills was a publicly owned manufacturer of textiles with annual revenue approaching $1 Billion in the late 1990’s.  The Company operated in four primary market segments including automotive, apparel, home furnishings and industrial. The Company had manufacturing facilities in the US, Mexico, Brazil, Great Britain and Portugal.  Rising foreign competition coupled with an economic downturn adversely affected profits and cash flow forcing the Company to reassess its operations and position in its various markets.  We were engaged by the Company to assess its operations, financial alternatives; we ultimately prepared it for and guided it through the Chapter 11 process.

Process:
In depth reviews of operations, management, markets, customers and financials were conducted.  Financial and cash flow projections were refined, tested and aligned with debt service and covenant requirements.  Based on our assessment, plans were developed to exit certain market segments, dispose of excess assets and to restructure the entire company and its balance sheet via a Chapter 11 filing.  We developed a sophisticated cash management and forecasting system which became an integral part of weekly reporting to the lender group.  Working with company management and counsel, we assisted in arranging DIP and post- bankruptcy financing.  We prepared all bankruptcy court financial filings, arranged for the processing of creditor claims and coordinated all vendor management activities.

Results:
The Company’s plan to downsize operations, liquidate excess assets and revise its market focus allowed for a consensual Chapter 11 filing.  The accepted plan enabled the Company to emerge from bankruptcy six months after filing with a substantially improved balance sheet, its pre-petition trade debt paid in full and the secured lenders becoming majority shareholders.  Within 18 months of emergence, the Company was sold.  The cumulative result of pre-bankruptcy asset dispositions, sale of the restructured Company and liquidation of the remaining estate represented a recovery of 100% of the pre-petition debt plus interest.