Cheese and bread on a board

Silani Cheese

The “cheese” may “stand alone,” but sometimes the company needs help

Great cheese does stand alone. Its character speaks for itself. However, mid-sized companies like Ontario’s Silani cheese can run into financial barriers that are hard to surmount without assistance, even when product quality and demand are high.

Silani Cheese, a family-owned company manufacturing a wide variety of specialty cheeses for over 60 years, had run into financial issues due to an unusual combination of circumstances. After some unanticipated cost overruns and infrastructure issues, as well as several contracts that failed to come through as expected (and for which it had purchased machinery), it naturally turned for help to the banking facility it had in place. Unfortunately, certain margin criteria in the banking arrangement unexpectedly changed resulting in a reduced credit facility, forcing it to negotiate an insolvency/restructuring proposal with its creditors.

During the restructuring process, the company had repaid its bank debt using personal funds as well as financing from Farm Credit Canada, but in order to fully exit the proposal, it needed a broader financing solution—one that factoring could readily deliver.

”The need was critical and two-fold. Coming out of a company restructuring process, we of course had to pay the creditors. But to get the business rolling and back on its feet, we needed a steady, reliable source of working capital.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Getting the right solution—from the right people

Factoring was the right solution for Silani’s issues, it just needed the right provider. After several months of working with another factoring company during the restructuring process, going so far as to complete due diligence and advancing to the point of signing legal documents, Silani expected a cash advance to take the deal forward. At the eleventh hour, however, the provider backed out. After a second factoring provider also failed to deliver timely, effective service, Silani finally came to Liquid Capital.

Despite arriving rather late in the process, Liquid Capital impressed immediately with their face-to-face approach, deadline-driven commitment and upfront clarification of what was possible in terms of timing. In the end, Liquid Capital negotiated the deal, completed due diligence and funded Silani on the timeline it needed—all in less than three weeks—enabling Silani to exit the insolvency proposal and repay part of the Farm Credit loan as well.

“The other companies we dealt with just weren’t cutting it. Their financing approach made us nervous, and they made promises they couldn’t keep. When Liquid Capital came in and took over the deal, everything changed. We were three weeks into problematic negotiations with the other company—with an irreversible deadline looming—and Liquid Capital jumped in, put everything together and closed the deal two days ahead of schedule.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Making the most of the factoring solution

As a cheese producer, Silani receives milk deliveries three to four times a week, and those deliveries have to be prepaid. The upfront cash demands of the business are significant and unavoidable, making a reliable credit facility a business essential. With Liquid Capital, Silani now receives multiple fundings every week, as needed, so it has all the working capital it needs—plus enough to plan for growth.

Liquid Capital’s ability to understand and effectively manage the legal and timing aspects of the insolvency process was also a huge advantage for Silani. There’s a finite time limit to execute on the terms of these deals, and if they expire, the deal is done—and so, potentially, could be the business.

“It was pretty clear that Liquid Capital had a good deal of expertise with insolvency matters. They were very knowledgeable about what the ‘real’ deadlines were and what had to be done. I’m not sure what would have happened without them.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Paving the way for success and growth

With insolvency and restructuring behind it, Silani is full steam ahead. It has a new operating facility with added capacity and room to grow, and it’s counting on Liquid Capital to provide the financial resources it needs to find and service new business.

Having returned to profitability, Silani is taking time to focus on the business by improving training, increasing efficiency and adding capabilities—for example by putting in automatic labelers—all without having to worry about funding.

“Liquid Capital did everything they said they would do. They made a proposal and that’s what they delivered, without deviating in any manner. It was just so different from the other companies we dealt with. Put your terms together and deliver—what more can you ask? A fantastic experience.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.