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Metal & Plastic Components Manufacturer

 

SITUATION

Established in 1984, this company manufactures metal stampings, welded assemblies, plastic and metal components primarily for the automotive industry.  The downturn in the economy, turmoil in the automotive industry, and the loss of a key customer caused a sharp decline in revenues.  Despite aggressive reductions in overhead costs, the company ultimately had to seek protection through Chapter 11 Bankruptcy.  Given those circumstances, their Commercial Lender was unable to provide financing.  Rather than simply saying “no” to a client with a significant depository relationship, the banker turned to Magnolia Financial to provide an alternative.

 

SOLUTION

After extensive meetings with the owner and confidence in the turnaround plan, Magnolia committed to $1.6mm in Debtor-in-Possession Financing secured by the company’s Accounts Receivable.  The credit facility was subsequently approved by the Bankruptcy Court allowing the company to continue to fund operations and pay suppliers in a timely manner.  With the support of Magnolia Financial, the company has not lost orders and has recently added new customers.  Magnolia will continue to support the company as it finalizes its exit from bankruptcy.  The banker will seek to provide non-credit Treasury Management support and ultimately financing when appropriate.