Family-owned and founded in 1966, Quality Heating & Air Conditioning Inc. (“QHA” or the “Company”) has served construction and commercial clients across the Mid-Atlantic, touching many industries over the years. The CEO, who is the son of the founder, had explored a sale with a potential suitor a few years prior and, in an attempt to make the business more attractive, aggressively bid on work to increase the top-line revenue. While these efforts were successful in increasing the revenue of the Company, the jobs were not estimated accurately, and the additional work caused significant losses. The potential buyer backed out and the Company was saddled with fulfilling unprofitable contracts. In the following years, labor and material costs increased dramatically, exacerbating the liquidity constraints and forcing the CEO to fund operations with personal capital before ultimately filing Chapter 11.
With limited runway from the secured creditor, SC&H Capital launched an expedited marketing process to find a buyer for the Company. SC&H quickly negotiated a stalking horse bid and tested it in the market in advance of an auction.
Over the course of two days, SC&H conducted an auction and negotiated offers to sell certain assets, including contracts and equipment to a going concern buyer that would maintain employment for over 150 people. Certain other contracts that had minimal work left but significant retention payments to be collected were kept by the estate and completed by the debtor. This combination allowed for the highest recovery to the bankruptcy estate while still preserving jobs and providing continued service to the customers and vendors.