From Covenant Breach to Zero Revolver Draw in Nine Months
A founder-led grain trading and logistics platform · $30MM+ annual grain volume
Company, lender, and counterparty names have been anonymized and identifying details generalized. All figures are actuals as reported to the incumbent lender in July 2026.
- $1.07MM → $0: revolver draw at the cure date, plan vs. actual
- +$247K: collateral coverage vs. plan (cost basis)
- +115%: EBITDA vs. plan, October 2025 – June 2026
- 16 → (1.2): working capital days on the balance sheet
The Situation
In Q3 2025, management identified balance-sheet risk heading into 2026. A farming division absorbed in 2023 — originally to secure specialty supply for the trading book — had produced an estimated $635K loss after a weak harvest. The cash impact was partially obscured: roughly $325K of Q2–Q3 rail freight remained unbilled due to a carrier-side delay, and about $225K of storage-facility construction had been funded from working capital rather than term debt. The revolving line of credit was out of compliance, and with reporting on a quarterly cycle and no forward model, the problem had surfaced late.
Management engaged Saorsa in September 2025 to diagnose the position, design a risk reduction plan, present it to the incumbent lender, and stay embedded through execution.
Snapshot
- The Company: Founder-led grain trading and logistics platform formed in 2020, when two owner-operators spun out a book of trading relationships. Moves more than $30MM of grain annually across trading and logistics divisions, plus a legacy farming operation.
- The Situation, September 2025: Out of compliance on its revolving line of credit. The farming division was tracking toward a $635K annual loss, partially masked by ~$325K of unbilled rail freight; ~$225K of unfinanced construction had compressed liquidity; financial feedback loops were quarterly at best.
- The Engagement: Diagnosis, a five-part risk reduction plan, a lender presentation within roughly eight weeks, and embedded execution support: weekly working-capital reviews, monthly three-statement reforecasts, and ongoing lender reporting.
- The Outcome, June 2026: The plan forecast $1.07MM of revolver utilization at the cure date; the actual draw was zero. Collateral coverage finished $247K ahead of plan on a cost-basis methodology, and EBITDA came in 115% above plan. Compliance was restored on the committed timeline.
The Plan — Presented to the Bank, November 2025
Within roughly eight weeks of engagement, management and Saorsa put a five-part plan in front of the lender, with a committed cure date of June 2026:
- 1. Shut down the farming division. The decision was made within weeks of diagnosis; operations ceased November 21, 2025, eliminating ~$670K of annual overhead. Year-to-date farming losses subsequently fell $345K versus the prior year.
- 2. Cut non-farm operating costs by $270K per year — owner salary reductions ($80K), other headcount ($120K), and renegotiated leases and insurance ($70K).
- 3. Inject $300K of owner capital, made contingent on a bank-documented compliance plan and applied directly against the accrued rail liability. Funded January 2026, structured with the Bank's approval as a subordinated owner note.
- 4. Sell farm assets — roughly $715K at listing value — to pay down ~$665K of equipment and revolver debt.
- 5. Bridge the collateral gap while cost reductions matured, via a temporary $400K term-out and credit for equity in existing assets.
The plan came with infrastructure, not just intentions: a three-year monthly three-statement model, a weekly working-capital scorecard, and weekly management review sessions — tightening the Company's feedback cycle from quarterly to weekly.
Results — Plan vs. Actual, October 2025 – June 2026
- Revenue: plan $22.26MM, actual $27.03MM (+21.5%)
- Gross profit: plan $1.62MM, actual $2.00MM (+23.6%)
- Operating expenses: plan $1.39MM, actual $1.50MM (+8.3%)
- EBITDA: plan $231K, actual $497K (+115%)
- Interest expense: plan $123K, actual $81K (34.5% lower)
- Operating income: plan $108K, actual $416K (+286%)
- Revolver draw at June 2026: plan $1.07MM, actual $0 ($1.07MM avoided)
- Collateral excess / (shortfall): plan ($34K), actual $214K (+$247K)
- Working capital days: plan 16, actual (1.2), a change of (17.2) days
Collateral figures use cost-basis inventory values — the Company's internal risk methodology — which understates coverage relative to the borrowing-base certification, which permits market values.
The Bank approved a $400K bridge facility as part of the plan. The Company never drew on it.
Where the Outperformance Came From
Four drivers explain the $1.07MM of avoided revolver utilization:
- Operations (+$275K). Trading gross profit grew 42% year-over-year, from $979K to $1.38MM. With the farm closed and one partner stepping into operations full-time, the trading lead concentrated on core commodities and deepened relationships with key customers in a tight supply market — including sourcing for new facilities in new geographies.
- Working capital (+$1.11MM). The largest single driver. With a weekly scorecard in place, AP days rose from 22 to 28.5, AR days fell from 18 to 11.6 (helped by new trucking-paperwork software), and inventory days fell from 20 to 15.7 — shifting the balance sheet from 16 working-capital days to negative 1.2. Because negative working capital generates cash as volume grows, the 42% volume increase compounded the effect.
- Equipment sales (−$263K). Deliberately slower than planned — covered below.
- Capitalization (−$55K). The owner injection was structured as subordinated debt with the Bank's approval, and select equipment was refinanced rather than sold.
The Operating Actions Behind the Numbers
A tight supply market helped the trading book. But most of the result came from specific changes in how the business ran, week by week. Each one ties to a line in the results above.
- A weekly planning and risk management session. Saorsa set up a recurring weekly meeting with leadership covering working-capital and liquidity tracking, trading exposure and inventory positioning, operational bottlenecks and exception management, and short-term decisions across the team. The feedback cycle moved from quarterly to weekly, so problems surfaced in days instead of after the quarter closed.
- A weekly working-capital scorecard. AR days, AP days, and inventory days were reviewed every week instead of at quarter-end. Over the period, AR days fell from 18 to 11.6, AP days rose from 22 to 28.5, and inventory days fell from 20 to 15.7. That is the +$1.11MM working-capital driver, the largest single source of the avoided revolver draw.
- Faster paperwork, faster collections. The Company adopted new trucking-paperwork software, which helped bring AR days down from 18 to 11.6.
- Divisional P&Ls and KPI dashboards. Trading, logistics, and farming were reported on separate P&Ls, with KPI dashboards and working-capital reporting built to match what the lender reads. The farm's losses showed on their own line instead of blended into the total, which supported the decision to close the division within weeks of the diagnosis.
- A three-statement monthly model with scenario planning. Management could stress-test decisions under different volume, pricing, and timing assumptions before committing cash, and monthly variance analysis caught drift early. Every managerial decision is still modeled at 13 working-capital days, not the negative 1.2 the business reached.
- Cost and interest discipline. Leases and insurance were renegotiated ($70K a year), owner salaries were reduced ($80K), and other headcount came down ($120K). A tighter working-capital strategy kept the revolver lower, and interest expense finished at $81K against a plan of $123K.
- Focus in the trading business. With the farm closed, one partner moved into operations full-time, and Saorsa supported the leadership transition and capacity planning. The trading lead concentrated on core commodities and key customers, and trading gross profit grew 42% year-over-year.
- Orderly asset sales, not a fire sale. Non-core assets were sold to pay down equipment debt and the revolver, but not at any price. Equipment essential to trading, such as a tractor in daily use for bin loading, was kept, and select equipment was refinanced instead of sold into a soft market.
What Didn't Go to Plan — Reported Anyway
A workout memo that only reports wins isn't credible. Three items ran behind plan, and each was disclosed to the Bank with the same rigor as the outperformance:
- The equipment sale program underperformed. A softer used-equipment market and the finding that certain assets — including a tractor in daily use for bin loading — were essential to trading operations left some items retained or unsold. Operating outperformance funded the patience to avoid liquidating at distressed prices.
- Expenses ran 8.3% over plan, driven by volume growth, catch-up maintenance, a modest office build-out, and legal fees — but they lagged gross profit growth, so operating margin still improved roughly 100 basis points.
- A $133K delinquent receivable from a former customer remains in litigation. It was excluded from eligible collateral and treated as upside, not plan.
The same conservatism runs forward: although the Company operated at negative 1.2 working-capital days through June, every managerial decision is still modeled at 13 days.
The Lender's Position Throughout
The plan was engineered around lender security from the first page. The owner injection was contingent on a bank-documented compliance path. Weekly management reviews and monthly reforecasts kept information current, and every variance — P&L, revolver utilization, collateral — was bridged line by line, misses included. The Bank finished the period with a borrower at zero revolver utilization, excess collateral under a methodology more conservative than its own borrowing base, and structurally improved earnings.
This case study was prepared by Saorsa Growth Partners, LLC from engagement records, with figures as reported to the client's lender. Identifying details have been anonymized. Saorsa is not a regulated financial advisor, financial institution, or otherwise professionally certified; nothing herein constitutes investment, legal, or tax advice, and credit decisions remain solely with the lender and the company.