Secured Creditor Turnaround CEO
One of the fastest growing providers of voice and data telecommunication services fell seriously delinquent in payments to its largest carrier, who was a secured creditor of the company. Ridge Point Partners, (formerly Asset Recovery Services, Inc.) was hired by the carrier to perform an operational and financial review of the company in order to determine the ability of the company to reach its stated projections and cover their debt obligations including a workout note that was to be negotiated with the carrier. ARSI identified various critical discrepancies relating to the company's projections, which when restated, showed the company breaching their lender's financial covenants, which in turn would cause a default in their workout note with the carrier. The lender agreed to modify the financial covenants and a workout note was successfully negotiated with the carrier.
A services company which generated revenues in excess of $275 million and was named #38 in the INC 500 fastest growing companies, filed for Chapter 11 bankruptcy protection. After the company filed for bankruptcy, Bryan Engle was hired by the Board of Directors as the CEO to develop and lead the reorganization efforts. The company listed liabilities in excess of $110 million and had a monthly cash burn rate of $2.5 million that would deplete the company of its remaining cash within 30 days. The company was quickly stabilized and a restructuring plan was developed and implemented, after which, the company generated a positive $1 million in monthly cash flow. The company was packaged, marketed and sold through the bankruptcy courts and ultimately returned in excess of $44 million to the secured creditors.
Receivership
A business services company that was less than one year old, grew too fast, was undercapitalized from the outset, and did not have the management capability or industry experience to manage the issues it was facing. The secured creditor successfully filed a motion to put the Company into Receivership and appoint Bryan Engle as the Receiver. The Receiver was able to negotiate the use of cash collateral with the secured creditor in order to operate the company, while simultaneously preparing due diligence materials to market and negotiate the sale of the company. A buyer ultimately purchased the secured creditors debt as well as all the stock of the Company. This allowed the secured creditor to improve their recovery from a liquidation estimate of 15 cents on the dollar, to over 60 cents on the dollar. In addition, the secured creditor received warrants in the buyers company, which provides a potential upside for the secured creditor.