Debt reduction by 32% for a construction wholesaler
The wholesaler struggled with payment bottlenecks. We conducted an audit and led to the arrangement-based remission of part of the interest with 14 suppliers.
Bud-Max wholesaler from Warsaw avoided bankruptcy thanks to debt restructuring with fourteen key suppliers. In less than five months, we reduced their penalty interest by 32%, allowing for the retention of 8 jobs and regaining contractor trust.
The challenge
At the beginning of August 2024, Bud-Max had its account blocked by two steel suppliers. Total arrears with 14 entities were exactly 482,600 PLN. Due to payment bottlenecks, the wholesaler could not buy goods for the autumn season, which threatened a complete paralysis of sales and layoffs. The situation was difficult as the average delay in payments had already exceeded 84 days.
The company owner tried to negotiate with the bank on his own, but without a hard restructuring plan, his applications were rejected. Creditors began to send final payment demands. The company faced a real specter of asset auctioning, including two forklifts and building ceramics stocks, which were the only liquidity security.
Our approach
Our 3-person team started with a full audit of financial documentation from the last 11 months. We had to know exactly where the money was escaping and which of the wholesaler's debtors had the longest delay. Talks with creditors began on September 14. We did not make empty promises, only showed hard financial data: Bud-Max has regular recipients and if it survives, it will pay the principal amount in full.
Instead of just sending letters, we personally visited the three largest creditors of the wholesaler. We presented them with a realistic repayment schedule spread over 18 months. The key was convincing them that Bud-Max's bankruptcy meant recovering only 12% of the debt after years of lawsuits, while our arrangement guaranteed them 99.7% of the principal amount in a shorter time.
The solution
We led to the signing of an arrangement agreement with all 14 suppliers. As part of the settlement, creditors agreed to a full remission of penalty interest accumulated over the last two quarters and part of the collection costs. The total remission amount was 41,200 PLN, giving the company necessary financial breath.
We also developed a new system for monitoring receivables collection from the wholesaler's recipients. We introduced a rule that no client gets goods on credit if their delay exceeds 14 days. Wisła Restructuring House also prepared a recovery plan for the bank, which consequently agreed to prolong the revolving credit for another 7 months.
Results
Bud-Max wholesaler regained financial liquidity and can again buy goods on deferred payment terms with 9 of the 14 former creditors.
Timeline
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August 12, 2024Analysis of bank statements and list of 14 creditors.
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September 4, 2024Sending arrangement proposals to steel and ceramics suppliers.
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October 19, 2024Signing of an agreement with the largest creditor (steel mill).
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December 15, 2024Verification of the first installment payment according to the new plan.
"To be honest, I thought I would close the business in October. Wisła Restructuring House squeezed such conditions from my suppliers that I wouldn't have negotiated myself. Most importantly, I'm taking goods on invoice again."