Case Study: BPO Collections Company
Company: $500 million Business Processing Outsourcing
(“BPO”) – Collections company.
Situation/ Tasks Performed: The Company was experiencing
a significant decline in its “run-rate” EBITD due to the loss
of its financing vehicle for charged-off accounts receivable portfolio purchases,
the loss of a major customer, and declining margins in a competitive industry.
Upon informing its Senior Lenders of the decline and resultant default under
its loan agreements, the Company hired TRG to assist in managing its liquidity
and developing a restructuring proposal. TRG assisted the Company in
managing its liquidity, developing both short and long term projections,
and negotiating with various constituencies, in particular the Senior
Lenders and equity sponsors, to reach consensus on a restructuring plan.
During the process, TRG assisted in developing and implementing plans
that reduced excess call center capacity and reduced costs sufficiently
to allow a restructuring. The restructuring plan required a significant
reduction in Senior debt, an injection of cash by the former equity sponsor,
and the provision of a new financing vehicle for charged-off accounts
receivable portfolio purchases.
Results: The Company filed a “pre-arranged”
bankruptcy after reaching agreement on a restructuring transaction with
its Senior Lenders and former equity sponsor. During the bankruptcy, TRG
implemented and managed a “sale process” designed to assure
the Senior Lenders, the Court, and other constituencies that the Plan
of Reorganization represented the best value for the Bankruptcy Estate.
Based upon the adequacy of the “sale process”, among other
things, the Company was able reach agreement with all but one of its constituencies
on the Plan of Reorganization. After an approximately four month “fast
track” bankruptcy process, the Plan of Reorganization was confirmed
allowing the Company to emerge with a realistic capital structure and
poised to take advantage of opportunities in the marketplace.
Nature of Assignment:
Primary: Crisis
Managment
Secondary: Turnaround
Plan Development & Implementation
Industry: Finance Services
|
