The Conclusions of the H. Brooks Saga – Produce Blue Book
So what really happened here? Why did this century-old company close its doors?
In an email shared with The Produce Reporter daily newsletter, the former CEO of H. Brooks and Company, LLC BB #: 100563, who left in June 2020, noted that he “resigned after he became very clear that the new ownership group could not sufficiently capitalize the company.
There’s much more to this case study, including several million dollars still unpaid and owed to generation and transmission companies, as well as litigation now established by plaintiffs representing pension and retirement plan obligations.
But the fundamental reason for this series is not to articulate everything that happened line by line, or even to offer a validated or educated guess as to why it happened. The purpose of this case study is to provide readers with the opportunity to assess the 30 months of compensation behavior before the company disappeared.
The data in the tables in the series indicate a moderately high to high risk. The Trade Experience Survey in January 2019 would not have been a trigger for most creditors, but the XX E report revealed greater concern with additional detail and A/R data suggested greater variability.
Blue Book members who provide A/R data have access to key risk characteristics that identify these emerging trends. To become a contributor, contact a rating analyst for more information.
Over the following months, a number of suppliers terminated their relationships with H. Brooks before they were unable to convert receivables into cash, while many others did not, despite the increasing risk shown in Table 9.
What’s the difference between a business that is able to stay stable or thrive year after year, while others struggle and/or eventually die out?
Generally, it is capitalization; but there are many underlying factors that can lead to failure. The main causes can include weak leadership, undisciplined business plan, ineffective strategies, poor execution, poor cash flow management, under-diversified customer base, limited market presence, etc. worry.
An easy way to track a company’s financial strength and monitor its performance is to take advantage of Blue Book’s predictive tools, such as ratings, scores, and real-time A/R aging data.
This detailed information, along with a company’s own data and credit policies, helps to make more informed business decisions.
To read the entire series online, click here.
This is an excerpt from the Credit and Finance department of the January/February 2022 issue of Produce Blueprints Magazine. Click here to read the full issue.