This successful textile wholesaler was caught between the changing economic environment caused by increased foreign competition and the loss of a major customer. The company’s outdated manufacturing and distribution model had become costly and uncompetitive while the business began to incur losses.

Key Issues

  • The company’s core business was still viable.
  • Financial covenants under the primary loan agreement had been breached.
  • The senior lender was in a large over-advance position on its borrowing base.
  • The company had a significant level of under-utilized assets.
  • The manufacturing and distribution model was costly and outdated.
  • Poor working capital management exacerbated the negative environment.


  • RSI developed a strategic plan to return the company to profitability and achieve compliance with the senior lender’s borrowing formula.
  • RSI planned and implemented the closure and sale of the company’s outdated and costly manufacturing and distribution facility.
  • RSI proposed outsourcing for meeting the company’s manufacturing and distribution needs, and assisted the company in implementing the outsourcing.
  • RSI helped the company to convert fixed costs into variable costs to lower its break-even point and better survive the prevailing economic downturn.
  • RSI guided the company to focus its business on key profitable customers.
  • RSI emphasized strong supply-chain management to enable the company to better manage working capital and its procurement, design and logistics functions.


  • The company reduced its cost structure, became profitable and made fresh investments in new-product development.
  • The company fully paid its existing bank debt and structured a new borrowing facility.
  • Management concentrated on fewer key, profitable customers and eliminated customers that were not profitable.