What was the situation?
Our client, Australia’s top manufacturer of wet wipes, faced numerous challenges. They were confronted with a winding-up application from a former supplier due to unpaid debts, grappled with eroding margins driven by escalating raw material costs and resistance from key customers to price increases. Additionally, the primary financier lost confidence in the company’s future and sought an exit strategy.
Given the circumstances, the director turned to us for a solution to protect the business and our appointment as voluntary administrators provided the necessary breathing space to navigate this ‘perfect storm’.
What was our strategy?
Recognising that shareholder funding was no longer an option, we focused on stabilising the business by fostering a collaborative environment with key customers and many employees. This collaborative approach enabled us to pursue an accelerated sale of the business as a going concern.
Our open engagement with customers yielded immediate results resulting in a substantial collection of outstanding debts. This positive outcome strengthened the bank’s confidence in the exit strategy, leading them to agree to cover outstanding payroll.
Following these critical early wins, we immediately focused on identifying and pursuing potential acquirers with the active support of key management.
What was the outcome?
By selling the business to the most suitable buyer as a going concern, we achieved several positive outcomes:
- Secured continued employment of 150 individuals.
- Fulfilled the financial obligations to the bank and other secured trade creditors.
- Delivered a return of circa 30 cents on the dollar to trade and government creditors.
- Ensured the continued availability of Australian-made wet wipes, bringing a sense of relief to many young parents across the country.
Ned Talic, Liquidator at Charles & Co commented:
“We are proud to have successfully restructured Australia’s largest contract manufacturer of baby wet wipes, safeguarding jobs and delivering a positive outcome for all parties involved. It was a close call, but we managed to avoid a messy situation.”
How can Charles & Co. help you?
With over 50 years of combined experience, our team is well-equipped to assist businesses facing various challenging and distressed situations. We encourage anyone experiencing financial or operational distress to contact us to discuss your options.