![]() ![]() This insurance company’s decision became the straw that broke the camel’s back, so to speak. And even though the company was successfully executing a restructuring plan, that insurance company”had already pre-determined to stop underwriting all of the Debtor’s risk.” Despite restructuring progress, a pre-determinedand devastating decision…Īccording to the Temiz affidavit, a certain, but unnamed, insurance company that was “the primary carrier for more than a dozen of the Debtor’s vendors,” including some of its largest lines, had become concerned about Electronics Expo deteriorating situation. All of this, of course, is subject to a degree of negotiation. The insurance company will conduct a separate assessment of the dealers situation and set the amount of risk it is willing to take. This reality has an interesting impact by putting control of the business in the hands of the insurance company and out of the hands of the company’s credit department. That way, if there is a major default, the insurance company pays the vendor a certain percentage against the default. Most major vendors hold reserves against bad debt, but also pay for credit insurance to insure their receivables. These aggressive, cash maintenance procedures would likely have a big impact on vendors. The situation forced them to slow vendor payments, more aggressively claim deductions (legitimate ones, their filing states), and “seek relief against payables by returning quantities of product.” Credit insurance underwriter pulls the plug… Leon Temiz But even so, the losses put tremendous pressure on the company’s cash flow – forcing them to live hand-to-mouth. Setting a new go-to-market strategy, moving away from lower priced, lower margin turn-and-burn lines and “toward a higher quality, higher margin solution oriented consumer.”īy implementing these restructuring tactics, Electronics Expo was able to cut monthly losses from $2 million in the middle of the year to $200,000 by the fall. ![]() Rewriting their marketing plans based on lower vendor support.Renegotiating existing advertising contracts. ![]() Cutting its workforce from 230 employees to 30 employees.Closing four unprofitable store locations.Electronics Expo management aggressively restructured the company by… As a result, company management reacted with a series of initiatives designed to restructure their operations in the wake of this new industry and business environment. Vendor cutbacks in promotional and pricing support: According to Electronics Express, the company experienced a “sharp decline in promotional and pricing support in 2012.” This was as a result of the “mounting operating losses among television manufacturers.”Īccording to the Temiz affidavit, the above factors seriously impacted the company’s financial health.But according to Electronics Expo, many of these vendors were slow to reimburse their legitimate credit claims which “tied up the Debtor’s working capital and negatively impacted its cash flow.” Vendors’ slow reimbursement of earned ‘instant rebate’ credits: To counter the negative impact on retailers’ sales of the above programs, many vendors offered an ‘instant rebate’ program so retailers could stimulate sales of certain models in-store. ![]() According to Electronics Express, this business was “a significant sales channel for the Debtor.” These new restrictions forbid sales through third-party websites.
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