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Executive Summary
SureCut Shears is a producer of household scissors and industrial shears. In June 1995, the company’s treasurer arranged a line of credit worth $3.5 million with the Hudson National Bank. The company requested a further $350, 000 in September, 1995. Later on in the year the company experienced a problem with repaying its loan. This problem continued into the following year as the company was faced with declining sales and a retailing downturn. Mr. Stewart, a senior loan officer at Hudson National Bank agreed to extend the company’s loan, although he requested a meeting to analyze the organization’s problem and determine the cause and/or causes.
Introduction
SureCut Inc manufactures household scissors and industrial shears. The corporation experienced steady profit and sales growth since the year 1958. This was made despite the existence of severe competition in the industry, especially from foreign companies. Senior loan officer, Michael Stewart, had pursued SureCut for several years prior to 1995. His reason being, that SureCut Shears usually kept sizable deposit balances in its principal banks. In the month of June 1995, SureCut’s treasurer, Mr. David Fischer, arranged a line of credit of $3.5 million with Hudson National Bank. The purpose of this loan was to cover the company’s requirements for the fall. A financial forecast given to Mr. Stewart also highlighted a need for $1 million by June 1996 to help fund an ongoing plant modernization program. This program was expected to improve efficiency and result in savings of $900,000 per year. Subsequent to June 1995, Mr. Fischer requested two other loan extensions and in early April 1 ...