Client
W.S. Lee & Sons, Inc. was a 134-year old, 4th generation, $100 million food distribution Company.
Problem
Absentee management, pursuing low-margin market school business, and a poorly conceived decision and implementation of a $250 million contract with the Commonwealth of Pennsylvania resulted in the consumption of $13 million of cash during a nine-month period, frequent out-of-stock conditions, requirements by vendors for COD or cash in advance, and a steady reduction in business from many core customers. W.S. Lee & Sons, Inc. needed an experienced advisor to help it understand all the possible courses of action to improve its business and to ultimately navigate a complex bankruptcy process.
Solution
Within 2 weeks, Phoenix concluded that, without major modifications to its Commonwealth contract as well as significant concessions from its major vendors and secured creditors, the Company would be unable to avoid a liquidation or bankruptcy filing. In conjunction with a complete overhaul of the Company’s operations, Phoenix gained the support of the secured creditor, maintained critical vendor support, and assisted the Company with preparing for a bankruptcy filing.
Solution – The New Transaction
Phoenix continued to advise the Company on a variety of operational, managerial and financial matters throughout the bankruptcy process, and was instrumental in formulating the Plan of Reorganization (the “Plan”). In addition, Phoenix reached an agreement with the senior creditor regarding the Plan, and structured $2.0 million of new equity in support of the Plan.
Phoenix’s close attention to operational issues and expertise in managing the bankruptcy process allowed W.S. Lee to emerge from bankruptcy in just 14 months. Other results included: the Company’s overall debt was restructured; expenses were reduced; product offerings were streamlined; and customer service was enhanced. The firm is now stronger and more efficient for its customers, employees and other stakeholders and continues a century-old family tradition.