The Client was a Travel Services Company providing reservation and marketing services for premium independent hotels worldwide.

Fort Dearborn worked with management to prepare a business plan to meet the Company’s short and long-term financial needs.  Near-term strategic investments in people and technology were temporarily delayed.  Cost controls were implemented, resulting in year-over-year reductions in legal expense, IT related fees (financial and operations systems) and other G&A expenses.  Vendors were prioritized and accounts payable disbursements tightly controlled.  A focused, detailed accounts receivable collection process was implemented, including hiring a permanent credit manager, as well as additional collection representatives.  These efforts resulted in the successful collection of 90% of the heavily-aged $11 million accounts receivable balance within a year.  Billing was moved in-house and, with related improvements in timeliness and accuracy, cash flow was strengthened. 

Fort Dearborn led negotiations resulting in material restructuring of the acquisition agreement.  Significant A/P balances were forgiven, based on service issues, and an eight-year payment plan was implemented for the remaining balance.  The Company received $1.25 million of service credits, usable as future “off invoice” deductions.  Contingent acquisition related payments were clearly quantified, the first payment due date delayed, and an eight-year fixed rate payment plan implemented.  In addition, payments associated with a subordinated note given at acquisition closing were extended.

Based on the successful negotiations, cash flow improvements enabling cure of the overadvance, and the financial forecast, the lender renewed the Company’s financing at substantially the same terms as a year earlier. 

Despite the continuing soft business climate and travel industry woes, the changes implemented resulted in the Company having a profitable year.