RMCF presents a deeply stressed liquidation posture as of November 30, 2025. MFFAIS's computed cash liquidation value of negative $5.8 million confirms that even after applying standard recovery haircuts to the asset side, liabilities exceed recoverable asset values by a material margin. The operating liquidation value of positive $2.0 million reflects only a marginal recovery scenario that depends heavily on PP&E realizing mid-range recovery rates, which is uncertain for food-manufacturing equipment. Total assets are $20.7 million against total liabilities of $14.7 million, yielding book equity of $6.0 million. The liquidation gap arises from the asset haircut math: PP&E gross of $21.9 million carries $13.0 million of accumulated depreciation, leaving net book value of $8.8 million. At a 50-60% recovery rate, PP&E yields $4.4-5.3 million—a $3.5-4.4 million haircut from book. Intangibles ($0.19 million net finite-lived, $0.58 million goodwill) recover zero. Inventory at $4.0 million recovers roughly $2.4 million at 60%. These haircuts aggregate to eliminate most of the stated equity buffer. The primary liability driver is notes payable of $7.77 million at face value (12% interest, maturing September 2027), comprising a $6.6 million RMC Credit Agreement draw and a $1.2 million RMCF2 facility, both collateralized by substantially all Durango real estate, inventory, PP&E, AR, and cash—meaning lenders have first claim on the assets most likely to generate liquidation proceeds. Operating lease obligations of $1.45 million and commodity purchase obligations of $4.2 million (disclosed in MD&A but not separately tagged as a liability in XBRL) represent additional face-value claims that do not extinguish on wind-up. Management has disclosed a going-concern qualification from its auditor on the FY2025 10-K and reiterated substantial doubt in this filing. Both credit agreements carry a liabilities-to-tangible-net-worth covenant (2.0:1.0) that the company was not in compliance with as of November 30, 2025; lenders granted waivers for Q2 and Q3 FY2026 but retained the right to demand repayment on future violations. Subsequent to period end, the company raised $2.7 million via a private placement and repaid $1.2 million of outstanding debt, modestly improving the near-term liquidity position but not resolving the structural negative liquidation value. The filing discusses $4.2 million in commodity purchase obligations in MD&A but does not separately tag these as a XBRL liability line.
▼ Community Notes