Our client, a manufacturer of consumer goods, merged with a larger competitor in the same industry. On paper, the merger made lots of sense.

It was an opportunity to move up-market, enjoy the economies of scale associated with combining the two manufacturing plants, and an opportunity to benefit from a very well-known brand name that was licensed to its new merger partner.

However, shortly after the merger, it became evident to our client that the financial wellness of its partner had been significantly over-stated. In fact, the company was on the verge on the insolvency. There were other divergences in culture and management style that made it impossible for them to live together. A capital injection was essential, but our client who had access to the funds, was not willing to invest further without addressing the core problems facing the company.

The Company filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. This provided the much needed to protection against its creditors and kept the valuable license intact. Given some breathing room and with our assistance, our client was able to formulate a proposal acceptable to its creditors; buy out his partner; refinance and restructure the operations.

Under the entrepreneurial leadership of our client, the company was significantly improved and was sold 5 years later for many multiples of the original investment.

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