SL&A is often the initial party on the scene when the borrower’s business slumps, loan performance deteriorates, covenants are violated, business affairs are questionable or financial statements and borrowing base certificates lack transparency.
The firm has proven expertise in righting short term borrower problems, implementing performance-improving procedures and controls, re-engineering and re-organizing, controlling cash and collateral, installing interim management, and recognizing – early in the process – fraud and other loss problems. We focus on protecting the creditor’s interests, minimizing losses and maximizing recoveries. We specialize in working very closely and collaboratively with creditor’s counsel.
In fraud and other misconduct situations, we are experienced at analyzing the scheme, tracing funds and other assets, recovering misappropriated and diverted assets, preserving and protecting key records, maintaining chain of custody, supporting litigation leading to attachment orders and judgments, and domesticating US judgments in foreign venues.
Our professionals expend extraordinary effort to resolve workout situations without litigation or bankruptcy proceedings. Should that fail, we have a successful track record of proving frauds and recovering lender cash and collateral.
Selected Case Studies/Notable Matters
- Took control of cash and operations of a major national medical billing and practice management company that had defaulted on its loans due to mismanagement and self-dealing. Worked with outside directors to replace management, recover fraudulent conveyances and successfully prepare the company for a takeout lender.
- Engaged by a food processing company because interim financial statements consistently could not be reconciled to the debtor’s borrowing base certificate. Reorganized the accounting and financial functions. Installed new revenue recognition procedures and controls. Determined that the variance was due to improperly treated inventory-in-transit and consignment sales. Recommended that the lender reduce its advance rate on receivables and extend no credit on inventory. Oversaw the installation of a perpetual inventory system, directed write-downs of obsolete and slow-moving inventories and streamlined the receivables collection process. Cash flow, inventory turns, receivables turns and liquidity all improved within 13 weeks. “Lender fatigue” subsided. The loan was moved out of special assets. No take out lender was needed.
- Provided loan workout support to a secured lender. Undertook a liquidation analysis of the debtor and organized its assets for sale. Investigated the financial and business affairs of the debtor, a leading electronics assembly and distribution firm. Led and directed the computer forensics investigation that produced critical evidential material for a subsequent fraud, conspiracy and conversion trial where the lender prevailed. Identified and proved various species of fraud. Proved self-dealing. Showed that major vendors and customers were alter egos. Supported the Trustee’s accounts receivable collection lawsuits. Analyzed the work of the independent auditors and assembled the evidential material required to pursue a negligent misrepresentation claim.