Case Studies

Reducing a Lender's Loan Exposure

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Home·Reducing a Lender's Loan Exposure

The Situation

120 locations, 6,400-bed Assisted Living Centers. $200 million annual revenues. $190 million in debt. 

  • Illinois budget problems resulted in Medicare reimbursements being cut off statewide.
  • 35% of the company's receipts are aging past 120 days, with no indication of when payments from the state will resume.
  • Facing tremendous budget shortfalls, Illinois limited Medicare reimbursements and extended payment deadlines by 120-150 days.
  • AR was growing over $1 million each mont,h and AP was being stretched a similar amount to maintain liquidity.
  • The company was being run in 13 different silos representing various acquisitions. Fragmented corporate structure; intercompany transfers involved due to/due from the controlling shareholder.
  • Certain silos are paying AP down to near zero days, while others are extending credit past 120 days. There was no coherent management strategy to address the situation.

How We Advised

Our experts were hired by a bank group to review the collateral situation and assess the company’s management and their plans to address issues

  • Analysis identified additional personal collateral of the controlling shareholder.
  • Reviewed the overall company financial situation, regarding refinancing options, collateral valuations, and cash flow of operations.
  • Prepared assessment of bank documents, collateral positions, and developed options for the bank group as part of the refinancing process.
  • Bank exposure reduced from $25 million to $5 million as part of refinancing.
  • Additional collateral from the primary shareholder was identified, turned into cash, and used to provide liquidity for entities.
  • Our team continues to provide quarterly monitoring for the bank group to ensure compliance with covenants and identify ongoing operational issues.

Key Contact

Mark J. Welch, CPA, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 412 498 8258 
[email protected] 

Related Practice Areas

> Business / Operational Assessment 
Most consulting firms approach a business assessment from a purely financial perspective — our assessments provide a 360° view of a business, addressing growth drivers, profitability, and uses of capital. Along with detailed financial performance reviews and cash flow forecasting, our comprehensive Business / Operational Assessment identifies the various challenges clients encounter throughout their operations. 

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

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