Due to a liquidity crisis precipitated by weak operating results, missed covenants and tightening of vendor trade credit, a supermarket retailer and wholesaler with 213 stores and 140 wholesale customers in six states, filed for Chapter 11 and William Murphy was appointed as the interim CFO. Mr. Murphy lead the team that formulated and executed a turnaround plan to focus on the core business.
The efforts included a review and challenge of business plans prepared by operating unit, development of a detailed cash flow model used as the basis for the negotiation of the financing needs, and assisted in the negotiation of the loan agreement with a bank group with divergent goals and interests. We also identified and coordinated the sale of non-core assets, including sale or liquidation of 104 stores, reduced the total headcount by 8,000 employees, including 400 corporate positions which reduced annual overhead costs by 22%, instituted programs to restore vendor credit to 80% of prepetition levels while still in bankruptcy and improved operating margins from 2% to 3.8% of sales.
As the Interim CFO, Mr. Murphy negotiated a $36 million sale-leaseback transaction which enabled the company to emerge with no bank debt. In addition to leading the refinancing efforts, Mr. Murphy lead efforts regarding restatement of financial statements as the result of reorganization in Chapter 11 (referred to as, Fresh Start accounting), coordinated with external accounting firm issuance of reorganized company financial statements and address impact of DOJ investigation.