In May 2024, MCA Financial Group was retained to assist a nationwide fitness equipment retailer and liquidator amid significant financial distress. This client, based in Arizona, operated a physical showroom and warehouse, distributing both premier liquidated name-brand equipment and an in-house brand manufactured in Asia. Despite strong annual revenue between $4-5 million, the company grappled with managing secured debt payments on a $5 million SBA-funded loan due to declining sales in the post-COVID environment and escalating operational costs.
MCA’s professionals were engaged as financial advisors to guide the client’s Chapter 11 Subchapter V reorganization. The primary objective was to facilitate the consolidation of the client’s operations into a single location while effectively managing their debt obligations and restructuring the business to ensure long-term viability.
To achieve this, MCA Financial’s team meticulously crafted precise and reliable financial projections and conducted a preliminary business valuation. These strategic measures were pivotal in planning and negotiating with creditors. Additionally, we undertook a comprehensive liquidation analysis, demonstrating that creditors would receive superior returns under the proposed reorganization plan compared to a Chapter 7 liquidation. This analysis was instrumental in substantiating the feasibility of our restructuring proposal.
MCA Financial successfully negotiated a revised valuation of the secured debt with the lender and secured a global settlement with the original sellers. Moreover, we achieved a consensual plan agreement with all pertinent stakeholders, including the secured lender, the Subchapter V Trustee, and the US Trustee. MCA’s team also provided testimony through written declarations supporting the bankruptcy plan’s approval, highlighting the proposal’s fairness and viability.
One of the most significant challenges involved developing reliable sales projections in a cooling market. This necessitated an exhaustive analysis of accounting and Shopify sales data and the formulation of well-founded assumptions.
MCA Financial Group exceeded our client’s expectations, exemplifying our firm’s capability to navigate complex financial restructurings. Our expertise in financial analysis and stakeholder negotiation enabled us to deliver practical solutions that ensured business continuity and satisfied all parties involved.