Case Study: Restructuring a Logistics Company

Names, locations, and certain details of this case have been modified to protect the confidentiality of the parties involved. The figures and results are representative of the actual transaction.

The Starting Point

A full-service transport and logistics company — warehousing, distribution, and last-mile delivery — with 62 employees, a fleet of 38 vehicles, and revenue of EUR 8 million. The business had been founded by an entrepreneurial couple twenty years earlier, starting with one van and a rented warehouse.

Two decades later, the company had eight times the revenue but was technically insolvent. EBITDA had fallen to EUR 180,000 — a 2.2% margin that did not cover debt service. Lease payments on the fleet, bank loans, and a pandemic-era government loan totalled monthly maturities of EUR 95,000 against operating cash generation of EUR 40,000.

The main bank had communicated that it would not renew the EUR 500,000 credit line maturing in three months. Without that line, the company could not pay salaries.

The Challenge

Imminent liquidity crisis. Three months until complete asphyxiation. There was no time for lengthy negotiations.

Unsustainable debt. Total financial debt was EUR 3.8 million — more than 20 times EBITDA. Without a deep restructuring of the debt, the company could not survive.

Oversized fleet. Of the 38 vehicles, 12 were underutilised (average occupancy of 35%). But the leases had early termination penalties, and returning the vehicles meant losing operational capacity that, during certain demand peaks, was necessary.

Client concentration. A single client — a food distribution chain — accounted for 35% of revenue. That client had reduced rates by 8% two years earlier, and the company had not been able to say no. The result: a line of business generating 35% of revenue but only 12% of gross margin.

Exhausted founders. The founding couple, both in their mid-fifties, had been managing the crisis for two years without seeking outside help. They were physically and emotionally exhausted. The husband managed operations and the wife handled administration, and neither had the energy nor the tools to reverse the situation.

Our Approach

Urgency defined the approach. There was no time for a four-month diagnostic — we had weeks, not months.

Phase 1: Stabilisation (weeks 1-6)

Liquidity injection. We provided EUR 600,000 as a participating loan convertible into equity, conditional on execution of the restructuring plan. This covered the immediate maturities and provided breathing room to negotiate.

Communication to banks. We contacted the main bank and two secondary banks to communicate the entry of a committed investor, present a draft viability plan, and request a six-month standstill while the formal debt restructuring was negotiated.

Emergency measures. We cancelled three leases on underutilised vehicles (accepting the penalties as the lesser evil), renegotiated the rent on the second warehouse (operating at 40% capacity), and suspended all non-essential investment.

Phase 2: Operational Restructuring (months 2-8)

Profitability analysis by route and client. We implemented a cost control system the company did not have. We discovered that of the 43 active clients, 11 were generating net losses. Three of them were “legacy” clients paying rates from ten years ago.

Client portfolio rebalancing. We negotiated rate increases with the 11 loss-making clients. Seven accepted. Four did not, and we stopped serving them. Revenue fell 6% but gross margin rose 18%.

The large client. We renegotiated the contract with the distribution chain. The alternative was clear: either rates were adjusted to actual costs, or we would drop the route. The client, who valued the quality of service and had no immediate alternative, accepted a 5% increase with CPI-linked indexation for future years.

Fleet optimisation. We reduced the fleet from 38 to 29 vehicles. We returned the leases on the 9 underutilised vehicles and replaced 4 ageing vehicles with high accident rates and high fuel consumption with more efficient models.

Workforce adjustment. Reduction from 62 to 54 employees. The adjustments focused on the second warehouse (which was closed) and on duplicated administrative functions. Drivers were retained at 100% — we did not want to lose operational capacity.

Phase 3: Financial Restructuring (months 6-12)

With the operational results already visible (EBITDA for the third quarter was 180% higher than the same period the previous year), we negotiated the formal debt restructuring:

Bank debt (EUR 2.1M). 15% haircut (EUR 315,000), 18-month moratorium, and new 7-year amortisation schedule at a fixed rate of 4.5%. The banks accepted because the alternative — insolvency proceedings — would have cost them much more.

Leases (EUR 1.2M). Restructuring of the terms on active leases and cancellation of the returned vehicles.

Public debt (EUR 500K). 24-month deferral with the Social Security and tax authorities, with a monthly payment schedule.

Phase 4: Consolidation (months 12-24)

Loan-to-equity conversion. The initial participating loan was converted into 55% of the shares. The founders retained 45%, with a shareholders’ agreement governing governance and providing a buyback mechanism at 5 years if results permitted.

Professionalisation. Hiring of an experienced operations director. The founding husband moved to a commercial director role (his true strength). The wife stepped back from day-to-day management, maintaining her seat on the board.

Systems. Implementation of a TMS (Transport Management System) that automated route planning and invoicing, reducing errors and improving fleet utilisation.

Results

Metric	Start	12 months	24 months
Revenue	EUR 8.0M	EUR 7.5M	EUR 8.3M
EBITDA	EUR 180K (2.2%)	EUR 720K (9.6%)	EUR 1.05M (12.7%)
Headcount	62	54	57
Fleet	38 vehicles	29 vehicles	31 vehicles
Net financial debt	EUR 3.8M	EUR 3.0M	EUR 2.2M
Active clients	43	36	41

Revenue initially fell due to the clean-up of unprofitable clients, but recovered and surpassed the original level with higher-margin clients. EBITDA increased nearly sixfold. Debt was reduced to manageable levels. And the company, which had been three months from insolvency, became a profitable and sustainable business.

Lessons

Speed is essential in distressed situations. Every week of inaction destroys value. Stabilisation must be immediate — the detailed diagnosis can be done in parallel.

Not all revenue is good. The company was billing EUR 8 million but a significant part of that revenue was destroying value. Sometimes, billing less means earning more.

The founders are not the problem — the lack of structure is. The founding couple had the commitment and the market knowledge. What they lacked were the management tools, the control systems, and the management team that an EUR 8 million business needs.

Financial restructuring without operational restructuring is a patch. Refinancing debt without changing operations only delays the problem. A bank that sees improving operational results is infinitely more receptive to restructuring debt than one that only sees a business owner asking for more time.

If your logistics company — or a company in any sector — faces a similar situation, experience teaches us that the sooner you act, the more options there are and the better the outcome. Contact our team for a confidential conversation.