Case Study

Managing Chaos to Maximize Returns

Construction Liquidation

The Challenge

$1.2 Million in Open Accounts Receivable

A private equity (PE) owned construction company ceased operations, leaving approximately 60 jobs in various states of completion. With a total of $1.2 million in open accounts receivable (AR), the outgoing bookkeeper estimated that roughly $800,000 was collectible. The situation presented several significant challenges, including:

Some jobs had liens filed by unpaid subcontractors who had been engaged by the client. Other jobs were uncompleted, potentially requiring additional subcontractors, incurring further expenses, and leading to warranty issues.
In most cases, the contractor's lien rights had expired.
A key unsecured vendor, owed a substantial sum by the client, was also attempting to collect on their open balances directly from some of the larger customers, causing confusion.

Having successfully resolved its own loan, the bank that had provided financing to the PE firm recommended that they reach out to us to help liquidate the outstanding AR.

The Solution

A Steady Voice

Upon engagement, we made contact with each customer to determine the status and collectability of each project. Our extensive experience in construction, crucial to the success of the liquidation, included the following steps:

Dispelling Confusion

Providing clear, thorough and knowledgeable communication, we were able to dispel the confusion caused by the unsecured vendor.

Negotiating Payments

We negotiated payments to the subcontractors to clear liens and recover the net amounts.

Follow Through

We stayed in front of each customer to see the projects through to completion and ensure payment for those jobs.

Building Rapport

Establishing rapport with each account, we built trust, assuring them that the situation would be resolved.

Key Achievements

$650K

in collections in the first five months!

$150K

Additional recovery identified.

The Results

80%

Of Anticipated Recovery In Just Five Months

The liquidation effort yielded significant returns totaling 80% of the expected $800,000 predicted as recoverable in just five months, despite the complexity of the incomplete projects, expired lien rights, and competing collections.

In addition, commitments from customers indicate the potential to collect another $350,000, nearly 20% more than the outgoing bookkeeper originally estimated as recoverable.