Sportswear Manufacturer
Transaction Type: Restructuring
Industry: Consumer Products
Location: Northwest United States
Client: Debtor-in-Possession
Role: Financial Advisor and Chief Restructuring Officer
Our client was a very successful clothing manufacturer for men’s and women’s sportswear. Over a period of 10 years the company had established a very successful brand and was selling over $300,000,000 in clothing each year. As the company grew, it moved virtually all of the manufacturing offshore, leaving design, development and sales at the U.S. based locations. The company developed a very innovative new fabric, which was expected to dramatically increase sales as evidenced by strong customer interest at the retail buyer level. With this level of interest, management decided to make a major investment in new manufacturing facilities and the buildup of inventory based on the new fabric.
Production problems arose with the new items and the fabric did not perform as expected. This led to the cancellation of significant orders as they were delayed and not at the quality level demanded by the customers. These problems resulted in a severe credit crunch for the company since it could not liquidate the inventory that had been financed by its lines of credit and trade finance sources. The company sought bankruptcy protection and a principal of Cascade was retained as Chief Restructuring Officer.
As CRO and financial advisors, we actively evaluated the finances, operating structure, real estate leases, manufacturing arrangements, competitive positioning, and financial feasibility of the company. On numerous occasions we were required to present our findings to the court and actively engaged all creditor groups in the restructuring of the company. At the conclusion of our assignment, we had assisted in the liquidation of the inventory, the disposition of the manufacturing facilities, the renegotiation of various leases, and the successful transition of the company to a licensing entity. Since then, the company has generated over $100,000,000 in licensing fees from its brand.