CORRUGATED CONTAINERS

THE COMPANY

$ 25 Million Privately held manufacturer of Corrugated Cartons.

THE SITUATION

The Company had filed for Chapter 11 protection. Asset Based Lender owed $ 6.75 Million-Value of Collateral $ 3.8 Million; Equipment Lenders (16) owed $ 13.25 Million-Value of Collateral $ 1.1 Million; Unsecured Creditors, mainly the trade, owed $ 10.0 Million. Estimated negative net worth in excess of $ 18 Million.

No reliable financial statements; no discernable internal controls; sales orders not in writing; no written schedules for production machines; entire work force continually on overtime; embezzlement suit instituted against former Controller; CFO resigned five days after filing.

ACTION

Introduced into the situation as Turnaround Consultant with acquiescence of creditors. Working with new (second generation) management, instituted, over a period of 18 months, complete overhaul of factory, warehouse, delivery, billing and collection procedures resulting in cost savings in excess of $ 2.0 Million. Took complete charge of Bankruptcy process.

RESULTS

Built up unused line of credit in excess of $ 2.5 Million; Attained a level of profitability 50% greater than industry standard. Working with various counsel and directly with creditor constituencies and potential investors, settled with all creditors for approximately $ .10 on the dollar. New investor bought control for $ 600 Thousand plus $ 1.0 Million provided by original Asset Based Lender. Positive Net Worth at Confirmation of $ 600 Thousand. Company will earn in excess of $ 1.5 Million before taxes in the first year after Confirmation.

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