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Food Service Distributor
Assignments for the Benefit of Creditors
This company was formed as a result of the merger of two food service distributors. It had annual sales exceeding $300 million and approximately 400 employees. Problems plagued the company after the merger, including various issues regarding consolidation of the merged businesses, operational problems, inventory management problems, and other issues. The company lost money for several years following the merger. It unsuccessfully sought to sell its business and to restructure its unsecured debt and finally concluded that liquidation was the only viable alternative.
The company had no availability on its credit line with its bank and was unable to continue to finance its operations. With the bank’s consent, an ABC was commenced in order to allow an independent, disinterested, and experienced assignee to administer the wind-down of the company and liquidation of the assets. Upon commencement of the ABC, the assignee entered a “Consent to Use of Cash Collateral and Disposition Agreement” with the bank and worked with the unsecured creditors’ committee that was formed in this matter. Thereafter, pursuant to various sale transactions (including the sale of real property), settlement agreements, and other arrangements, the assets were liquidated and the ABC process administered by the assignee.