Financial advisors, avoiding BK(corp). Layin it out there, not pretty.

[lendaddy]

This is going to suck..............a lot.


I've mentioned before that our business hasn't been doing well and I've probably sugar coated even that. We are heavily automotive and we're in Michigan which is a mfg wasteland right now. We invested heavily in equipment to win new work at the downturn when we should have just shut the doors. Earlier in the year we lost 40% of our work to China. We (mostly my father as my assets were limited) have poured virtually everything we have back into the company and have watched it erode at an amazing clip. I am tapped out and my father is close. Watching him lose everything he spent the last 35 years building is not an easy thing.


Without getting into too much detail (which I'm not afraid of if it's required) I am looking for advice. We need to speak with a financial adviser in regards to financial crisis management and our options. We do not want to file BK if at all possible. We have some core business that is good but not enough to support the beast if you will. I have reluctantly had a couple consultations with BK lawyers and they essentially just want to start the process rather than advise as to other options. "just fill these out and we'll get rolling next week" ughhhh. The more I thought about it why would a bk lawyer advise me not to file? No BK, no fees for him...So, what kind of adviser should I be looking for? Is this even a "specialty"? Does anyone here have any experience in what we're going through?


Many times I have typed this out only to erase it due to pride. I don't have the luxury of pride anymore and you guys are by far more experienced and educated as a group than anyone I know in real life. I am not posting for pity or charity but rather the chance that someone may have some advice that helps my father, as I said this is a great knowledge base.

I and my family will be fine, my wife has recently taken a job and I'll find work if need be. I don't make much now so it's not a big deal in that regard. Besides, I'm relatively young and little assets to worry about. This is all about my mother and father and trying to protect them if at all possible (mainly their modest home).

We have not given up, we work seven days a week and are actively pursuing new work (some very exciting) but being extremely low on capital and time I need to prepare for the likely outcome. In years past we never had to advertise or even pound the pavement for work. In a way we thought that was our ace in the hole, that if things ever got ugly we could certainly drum up "sustenance" work. Well this has proven to be a very bad assumption on our part, the well appears quite dry. Even though I am a positive and well grounded person that deals very well with stress, the extreme stress and fog of all this makes it difficult to focus. Any advice is appreciated.

I'm just going to post this rambling rant before I erase it again and clear everything up later.

Thanks guys,

[TerryH]

Bump...

Len, Sorry I can't help. I'm in a similar situation, also tied to the US auto industry. This year, I will earn 40% of what I made in 2004 after a decade of growing my business. Six of the local Ford dealerships I subcontract for are closing in the next 90 days. Ford is planning to close 600 dealerships in the very near future. GM and Chry are not far behind. There have been lulls before, but this is more lull than many can tolerate.

Hope things work out for you and your family.

[pwd72s]

Damn, it saddens me to read this. I have no answer...only sympathy. Perhaps go into machining for other industries? A family in my neck of the woods is doing well...maching custom gears for any industry that needs them.

But that is all they've done for decades...

[motion]

Lendaddy, this is outside my areas, but if I can be of any help, please don't hesitate to ask. Tough times are tough, but they are good opportunities for growth.

[rfuerst911sc]

Sounds like you need to find a new niche for your business. If your dad has 35 years of experience it has to have value to fill a niche, it just might not be in the auto field. It's easy for me to say hang in there because I'm not affected but that might be good advice. What capability does your business have? Are you a machine shop? If you can let us know what your business is we may be able to give more precise suggestions. Good luck.

[the]

I think what you need is a lawyer who specializes in workouts. This likely will be someone with bky experience, but as you have found, a lot of bky lawyers aren't really interested in workouts, and just want to push the papers. But good workout lawyers are out there. I could help hook you up in Colorado or California, but I think you really need someone local. It's good to be able to meet face to face with the lawyer, go over documents, etc.

A good workout lawyer can be a real godsend to you and really help alleviate the stress. They've been through it before and knows what works and doesn't work, and take the reins as far as dealing with your creditors and helping you to put together a workable plan of attack. Once you have a strategy, you'll start feeling a LOT better. This is not an area you have experience with, and you are operating in the dark, which is causing stress. When you have someone skilled in the area watching out for your interests, someone you have confidence in, you'll feel better.

Basically, what you need to do is convince your creditors and suppliers, particularly the largest ones, that you are all in the same boat, and that it is best for everyone if you can work through this. You need a strategy where there is "light at the end of the tunnel," if your creditors and suppliers will cut you some temporary slack. Show them you have worked out a plan that is realistic and workable. Everybody will have to take some pain during this time, but will come out better than if you are forced into bky. You will need to deal with unsecured creditors and secured creditors.

Given what you've said, I think that can be done. Bky almost always doesn't work out well for unsecured creditors. Secured creditors are a bit more of a challenge, because in a bky they generally can take back their security, and if they are fully secured, they don't usually have much to lose in a bky.

The problem for everyone in a bky is that (1) if it is a Ch. 7 liquidation, people usually don't get much, and (2) if it is an 11, it is, ironically, a very expensive process that most companies can't afford. While you could come out of an 11 and survive, the reality is that for most small companies, the bky lawyers and process will suck what's left out of the company, and you'll end up in a 7.

Creditors usually realize those grim prospects, and will work with you. But the skills of your bky lawyer in dealing with them is really, really impt.

Again, local is better, but if you can't find anyone, shoot me a PM, and I'll see if I can hook you up with someone to at least talk to.

[BertBeagle]

Originally Posted by motion

Lendaddy, this is outside my areas, but if I can be of any help, please don't hesitate to ask. Tough times are tough, but they are good opportunities for growth.

+1

If time permits look at it from an opportunity perspective. For instance, I know of a foundry in Pa that had similar situation. Although I do not know all the details, they did have a lot of auto industry work. They shifted into small. lower volume production that served a new customer - the guy who can't afford to go to Asia because he doesn't need the volume of parts to make it worthwhile or he doesn't know how to source there or simply doesn't want to go there. This new strategy worked and now they are growing again. It is a family business also.

They went from being use to running one part for at least one shift or more on a casting machine to now changing molds 3 or 4 times per shift to accommodate the new low volume customer. They went from only machining what they cast to taking on outside machine work. Basically they changed the way they were doing business.

Its hard to see sometimes beyond the crisis but there is opportunity.

Do you have a rep out beating the bushes?

[Porsche-O-Phile]

Very sorry to hear.

Since manufacturing is being "outsourced" (I hate the phony, euphemistic nature of that word, actually) at such a frenzied pace, is there any possibility of shifting your own production overseas and transitioning your business into more of a domestic distributor role? I know it might not be as pleasant or as "nuts and bolts", but it's maybe worth considering.

Alternatively, there are still business that are doing assembly here in the U.S. Yes, they're becoming scarcer, but perhaps looking into heretofore unexplored niches - sports equipment, boats, aircraft, consumer goods? I wish I could offer some more specific advice, but all I'll say is I wish you the best of luck. I really do believe that if someone is good at what they do and passionate enough about it, there will always be a place at the table for them to eat - even during a famine. You certainly seem to have the passion and I've every reason to believe you have the skills. Believe in yourself.

There is still room for innovation in America - or for building a better mousetrap. One of our largest clients sometimes uses dock levelers for the receiving areas of their buildings. They prefer depressed truck wells, but they're starting to realize that these are very costly and lead to all kinds of problems with permitting, especially when they're on highly aggressive construction timetables. Anyway, long story short, the dock levelers they have been using for a long time are a bit of a pain also - they require a pit with trenched hydraulics, etc. One day on a site visit, a co-worker saw a new grocery store nearby installing a VERY slick new dock leveler - no pit required or anything. They literally dropped this thing off a flatbed onto a pad and in about an hour it was up and going - permanent installation completed. This new lift was a BRAND NEW product cooked up by a guy in Florida. Much better than anything else on the market - and he invented it himself. Needless to say, his business is booming right now. Our client tripped over themselves to get a presentation of his lift at their corporate HQ and they loved it. My point is - there is still room for opportunity out there if you're good.

Maybe there are some contracts for U.S. military or for defense contractors? With all the war efforts, I'd think that machining skills would be in some demand (producing parts for military vehicles & equipment, armor plating, etc.) Maybe worth looking into. . .

All the best in any case. Sorry to hear of your troubles. Never doubt that in adversity lies opportunity though. If I ever meet you, I'll share a story of my own with you over a beer or something - about 5 years ago I thought for sure that my wife and I were going to BK for sure, and we had about 2 months before we'd be kicked out on the street. We'd exhausted our meager life's savings and things were very dire. Long story short, we found a way. It might be difficult and ugly and disruptive in the short term, but I believe you will too.

If you know AutoCAD and can stand living in CA with all the liberal wackos out here, maybe we could use you. . .

[Jim Bremner]

what do you make ? what can you make?

[MRM]

Len, I am a lawyer, and it occurs to me that you probably do not need a lawyer. I think you need an accountant that specializes in distressed companies and debtors rights issues.

There is nothing wrong with lawyers, but they are set up for one purpose. They're the people that actually do the lawsuit, file the bankruptcy, etc. They're just not well set up to help you evaluate your situation and select your best option. Lawyers are best set up for when a client comes into them and says "I need ___ filed/drafted. Can you do it for me?"

What you really need now is a cold hard, professional assessment of your finances from a financial professional, and then some sober advice about how long you can last, what to jetison/expand in order to maximize what you have, and then your options on moving forward. Almost any decent public accounting firm will have accountants who can crunch the numbers, financial analysts who can tell you what is working and what isn't, and consultants who can help you put together a business plan for going forward, whether it's bankruptcy or a smaller company. The firm might even be able to hook you up with another client of theirs who needs what you sell or who is looking to invest in someone like you.

My sense is that part of your company is still proftabe but that is overwhelmed by th parts that are losing money. You might be able to save the tree by pruning its branches off ruthlessly. I think you need a professional to look at your books and help you decide.

If your company is large and is willing to pay $300-$500 an hour, call any of the Big 4 (are there still four of them) accounting firms - like Deloite Tousche, or the big consulting company - Accenture. If your company is smaller or would rather pay $250-$350 an hour, look for a reputable regional accounting firm with a consulting group, like McGladrey Pullen.

If you aren't willing to pay that much, look to 10 or 12 man CPA firms that have good reputations. Interview a bunch. Ask specifically for examples of their past work where they have helped people in your situation. There are lots of people who are expert in helping people in your situation. Call around, inteview accountants until you find a group that has a proven track record. Tell them your financial situation and agree on a budget in advance. They'll appreciate it and you will benefit from it.

[Seahawk]

Originally Posted by lendaddy

Even though I am a positive and well grounded person that deals very well with stress, the extreme stress and fog of all this makes it difficult to focus. Any advice is appreciated.

Road trip


Nothing to add that hasn't been posted...all the best, Len. You are a good man.

[stomachmonkey]

If I can find a way to help you I will.

Best,
Scott

[onewhippedpuppy]

Len, there's some very good advice posted above. I wholeheartedly agree with MRM, you don't need a lawyer. A quality accountant can give you the advice you need related to the state of your business. However, if you have issues with your creditors, legal advice might become more necessary.

How about more details? This is a pretty bright crowd, it's very possible someone here could come up with a niche that you haven't thought of. While I'm sure your situation seems dire, it sounds like you still have something worth fighting for.

Most importantly, keep your head up. Everybody has hard times, you'll make it through. The difference between winning and losing in life is getting back up when you've been knocked down.

[Mo_Gearhead]

Sorry to hear this. I know this must have been hard to post in the public venue ...so to speak.

Yes, details man! What EXACTLY do you and your father make? Sounds like no trade secrets to worry about exposing here. Give us more info.

Someone may provide more help/guidance that way.

[lendaddy]

Thanks guys, I really appreciate the many thoughtful responses. I was out for the night and just glanced them but I'm headed in to work now and will go over them more there. Asking for help is not something I've ever been "good at", and your reactions have helped ease some of my reservations already. Clicking the submit button on that original post was (oddly given the circumstances) one of the toughest things I've done in a while.

As I mentioned I have no problem giving more details if it will help and I fully intend to do so.

Thanks again guys.....sincerly, back shortly.

[scottbombedout]

Len,

This brought a tear to my eye as I went through this with my Dad in the early 90's. It still hurts to think what happened to us.

No advice, but the very best of luck.

Scott

[David]

I can't help with BK issue, but the thing that comes to mind is oil field equipment. Everything's in extremely high demand down here.

[lendaddy]

Originally Posted by 125shifter

I can't help with BK issue, but the thing that comes to mind is oil field equipment. Everything's in extremely high demand down here.

We are actually working with a drill tooling company in Texas right now. We are quoting liner hangers. It seems like an excellent opportunity but the five axis equipment alone is ~.5 mill.

More on this later.

[lendaddy]

Originally Posted by TerryH

Bump...

Len, Sorry I can't help. I'm in a similar situation, also tied to the US auto industry. This year, I will earn 40% of what I made in 2004 after a decade of growing my business. Six of the local Ford dealerships I subcontract for are closing in the next 90 days. Ford is planning to close 600 dealerships in the very near future. GM and Chry are not far behind. There have been lulls before, but this is more lull than many can tolerate.

Hope things work out for you and your family.

Sorry to hear this Terry, hopefully you can act now before it gets to be too late. Our biggest mistake so far was being overly optimistic. The work walked in the door for decades and we just got used to it, when it stops it's hard to believe.

[lendaddy]

Originally Posted by pwd72s

Damn, it saddens me to read this. I have no answer...only sympathy. Perhaps go into machining for other industries? A family in my neck of the woods is doing well...maching custom gears for any industry that needs them.

But that is all they've done for decades...

Yep, we're trying to branch out into others areas. Our lack of sales experience is really hurting us here and we certainly don't have any dough for a full time salesman. In trying to get reps they are very unexcited about representing a place like ours as they don't see much money in it (our gross revenue has never been much more than a million). The last three didn't even return my calls.