Martin Color-Fi

Situation

MCF is in the business of converting recycled plastics materials, such as processed film and bottles, into polyester fibers and yarn for automobile fabrics, carpet, apparel and other products. For 20 years MCF was highly successful, but was overcome by a combination of overleverage, excess inventory, foreign price pressure and the inability to integrate recent acquisitions successfully.

Engagement

MCF engaged Gordian Group to assist in its liquidity crisis. At the time, an imminent liquidation of MCF was quite likely, which would have resulted in about a 10% recovery for its senior secured creditors. Gordian Group embarked upon a three-pronged program: stabilize, monetize and reorganize. Working closely with new senior management, Gordian Group assisted the Company in taking dominion over its cash management, and assisted in achieving a smooth transition into Chapter 11. MCF utilized the Chapter 11 process to: (i) restructure operationally and shed noncore assets and, (ii) search for new equity and new debt. Having assisted in stabilizing MCF operationally and in directing the monetization of noncore assets, Gordian Group embarked upon a comprehensive search for new financing. These efforts culminated in a new package of debt and equity provided by GE Capital and Dimeling, Schreiber & Park. These funds were infused in connection with a consensual plan of reorganization of MCF.

Outcome

Senior creditors received about a 60% recovery, and even junior creditors achieved a recovery—a tremendous result given the inherent circumstances of this situation.