Financial Advisory for Lender with Troubled Borrower
Published on May 23, 2018
How a Bank Maximized its Recovery … without Repo’ing a Yacht
Our goal for every engagement we undertake, ranging from financial advisory to ABCs to receiverships, is to unravel the subject company’s financial information to facilitate informed, corrective action. What do you think are some of our more surprising discoveries during the unraveling? In this case, the $700,000 yacht took the prize!
Troubles at a Luggage Wholesaler
Issue: Bank became concerned when its borrower, a luggage wholesaler, began experiencing large operating losses resulting in an over-advance on its $25 million line of credit.
Engagement: The bank retained us as financial advisor to help restructure the borrower’s loan.
Process: To expedite our due diligence, we bypassed the company’s uncooperative management and worked with employees in accounting and sales to build financial models and review contracts.
Discoveries: The company’s projections were grossly overstated, approximately $1 million of the bank’s collateral was worthless and the sole shareholder had used the company’s cash to buy a $700,000 yacht.
The Bottom Line
With the benefit of the facts we uncovered, our bank client successfully secured additional collateral thereby improving its recovery.
Check out the full story here.