An insolvent company manages its complex creditor situation with Onsen
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USA
SaaS
$13M+
- Compliantly and efficiently dissolve the company and wind up operations
- Mitigate escalating creditor relationships and reduce risk of litigation
- Preserve investor relationships
- Documented and executed a clear and organized dissolution process to demonstrate equitable treatment of stakeholders
- Identified and executed a distribution waterfall (spreadsheet outlining how much money will be returned to each stakeholder)
- Provided relevant context of the shutdown to all creditors and investors
With more than $2M in liabilities and insufficient cash to fully repay creditors, the founder knew that shutting down the company would lead to difficult conversations.
Outstanding creditors would receive a fraction of their owed balances and no money was expected to be returned to investors.
The company partnered early-on with Onsen to manage an efficient and comprehensive shutdown process.
The company operated for over thirteen years and had a complex history of debt and equity financing. Liabilities included stale and active debts. Investors ranged from angels to large institutions.
Onsen reviewed the company’s financial statements, loan and investment agreements, and company documents to design and document a path forward. A comprehensive review of the company’s financial and operational context laid the groundwork for the shutdown process.
Onsen carefully documented findings of the company’s activities in the months leading up to the shutdown decision. The founder was able to send this documentation to creditors and investors who inquired about the shutdown process, preempting additional questions.
Documenting the process gave the founder peace of mind and another tool to substantiate their good faith and reasonable efforts in managing the shutdown process.
Onsen helped the company craft and deliver communications to creditors and investors and set expectations for the distribution of proceeds. Particularly with the company’s sensitive stakeholder relationships, Onsen's involvement as an independent advisor helped lend credibility and ease the tensions of challenging communications.
After working with Onsen to compliantly shut down the company and inform stakeholders, the founder was able to move on and is shifting focus to building a new venture.
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