Debtors, creditors and their advisors need accurate and timely financial information during an insolvency or potential insolvency. Nigro Karlin Segal & Feldstein LLP understands the workout environment and specialized needs of those facing insolvency. We help all parties work together to achieve the most desirable solutions.
We have performed numerous engagements on behalf of major banks throughout the country. Our services are well known in the workout industry.
Among the services we provide are:
- Acting as monitoring agent
- Evaluating operating and strategic plans
- Evaluating collateral
- Identifying core businesses
- Examining liquidation scenarios
- Identifying causes of action
- Developing and evaluating management and internal control systems
- Analyzing debt restructuring proposals
- Investigating the debtor’s tax situation
We know that timing is critical in workouts. Decisions must be made without delay and parties need relevant financial data in a timely manner. Our clients also receive the benefit of our business acumen. We have served secured and unsecured creditors in numerous industries, including aerospace, communications, distribution, garment, manufacturing, real estate, restaurant, retail and wholesale, hotel and food processing.
Insolvencies often require reconstruction of the debtor’s accounting records and investigation of complicated transactions. Our fraud investigations provide information on sources and uses of funds, identifying remaining assets and diversions of cash.
Once a loan is granted, timely information regarding the borrower’s changing financial condition and results of operations is imperative. We look at the controls over collateral and the internal reporting systems and determine if the eligible collateral is sufficient to support the established line of credit.
Conversion to Conforming or Daily Reporting
In a workout situation, you may want to place your borrower on a daily collateral reporting regime. We can help the borrower to set up the appropriate systems to make you aware of the judgments required to begin daily reporting.
Losses in a New Line of Business
A successful company ventured into a line of business and incurred significant losses. The company was unable to pay down its revolving line of credit or to borrow additional funds to finance profitable operations.
What we did: We acted as a monitoring agent for the bank group and set up a system of segregated funds as well as a weekly reporting system to raise cash through sales of unprofitable or marginally profitable divisions. After reviewing the company’s operating and strategic plans, we reported to the banks on the plans’ strengths and weaknesses and provided an opinion on whether their interests were best protected in or out of a Chapter 11 proceeding. Finally, we assisted the bank group in evaluating an outside offer to invest in the company in exchange for a large share of the company’s common stock and other financial terms.
Financial Forecast Under Chapter 11
A manufacturing company had filed for protection under Chapter 11 and was preparing a reorganization plan.
What we did: We developed a model of the company’s operation which, given assumptions about the volume and pricing, would calculate results of operations, financial position and cash flow. The model also calculated machine time, labor hours and shift requirements. Based on our work, we were able to make recommendations to the bank group that maximized the group’s recovery.
Cash Flow Problems in an LBO
A merchandising company with annual sales of $200 million was having severe cash flow problems related to debt incurred from a leverage buyout. The company was unable to service its debt and needed significant over-advances on its working capital line of credit from a group of banks.
What we did:
We analyzed the company’s financial position, identifying potential operations problems. We designed a new borrowing base, significantly reducing the banks’ exposure. We evaluated the company’s own financial projections and made recommendations to the bank group, the company and its investment advisors. We helped the company avoid Chapter 11 and eliminate $100 million in subordinated debentures.