The Department of Justice and Securities & Exchange Commission were investigating the company and its former officers for a variety of improprieties such as securities fraud and accounting fraud
The company was also under investigation by a group of 22 state attorneys general for alleged fraud in the sale of credit insurance
The company had no senior management
Lenders had lost confidence and begun to take large reserves against availability
Vendors were not shipping because they had not been paid and had lost confidence
The Solution
Immediately addressed the "credibility crisis" by developing an aggressive communication strategy with all key constituents (the government, the lenders, the vendors and the employees)
Aggressively managed cash
Negotiated an agreement with trade vendors to support the company through the holiday season
Obtained incremental financing in the form of secured loan junior to the company's existing lenders
The Results
Cooperated fully and completely with the government and state attorneys general and settled all matters
Executed a secured trade creditor agreement and vendors supported the company during the holiday season
Obtained incremental financing in the form of a junior secured loan
