Creditor Advisory

Creditor Advisory

Loss of credibility and trust, whether factually warranted or not, can often poison a debtor/creditor relationship and frequently requires insertion of an independent advisor. Whether engaged on behalf of Senior, Subordinated, or Unsecured Creditors, with our extensive operational experience, Kestrel is unusually well equipped to quickly gain credibility with and obtain cooperation from management, evaluate the facts, and isolate the real critical requirements from posturing and/or misconceptions.

Starting with disciplined review and analysis we establish a factual basis from which to 1) ratify or challenge the debtor’s proposals, 2) identify more favorable alternative options, and 3) negotiate most effectively in our clients’ best interests.

Selected Creditor Advisory Assignments

Contractor Services / IT Infrastructure

  • Retained by secured lenders to assess viability, controls and management of struggling roll-up challenged by external market decline.
  • Identified critical information and management deficiencies; designed and forced implementation of detailed weekly operational reporting package. Negotiated debt forbearance agreement with controlled support from lenders. Resulted in successful performance turnaround.

Automotive Car Carrier

  • Engaged as advisor to sub-debt holders following payment default to prepare a viability assessment and debt capacity analysis.
  • Assisted with negotiations of a forbearance agreement providing a modest principal reduction and term extension in return for significant collateral enhancement.

Leading Manufacturer of Metal Buildings

  • Retained by equity sponsor of highly leveraged buyout to provide Interim CFO, review operational strategy and manage cashflow during a liquidity crisis following payments defaults on secured debt.
  • Major cost reductions were effected, including the closure of two manufacturing plants. Chapter 11 bankruptcy proceedings were initiated to control off-balance sheet liabilities and the business was sold to a Japanese buyer wishing to enter U.S. markets.

Design, installation and maintenance of Industrial Corrosion Control Systems

  • Rapid acquisitions and ill-considered foreign expansion led to lack of financial controls and default on subordinated debt. Retained as advisor to sub-debt to evaluate company forecasts and restructuring proposal.
  • Identified serious management failures and strategic blunders. Assisted sub-debt negotiation; extracting key management changes and equity warrants while triggering disposition of non-profitable foreign operations in return for liquidity relief. Orderly operational changes and dispositions led to payment in full of original debt with residual value retained through warrants.

Meat Packing; Branded food products

  • Retained as financial advisor to Unsecured Creditors Committee after chapter 11 filing when merger debt could not be refinanced. Objective was to provide evaluation of proposed operational restructuring and Plan of Reorganization.
  • Role expanded to working with company on revising business strategy and selection of new management and Board of directors when creditors took control of the company. Creditors subsequently exited via sale of the business at a price 3X reorganization plan value.

International Educational / Reference Resource

  • Engaged by senior lenders to conduct a business viability and valuation analysis in conjunction with the Company’s request for an expanded credit line. 
  • Evaluation of Company’s plans and practices identified serious failures in management planning and strategy; specifically failure to invest in, or plan, for transition to web-based information exchange and research. Assisted lenders in debt restructuring negotiations which led to payment in full.

$1.0 Billion Conglomerate

  • Assumed Board control and executive management in a Chapter 11 Reorganization on behalf of Senior Lenders. Project included disengaging from extensive high cost, administrative, services provided by former corporate parent; effecting going concern sales of diverse businesses and winddown/liquidation of unprofitable operations. 
  • Effected Plan of Reorganization under which the largest subsidiary emerged as a public company and other standalone businesses were sold in fourteen separate transactions. Resolved large, complex, liability exposures and sold 60 surplus commercial and industrial real estate properties.

Major recreational Time-share Developer

  • A series of unprofitable new developments during an economic downturn led to a Chapter 11 filing. Retained by secured creditors to evaluate company’s proposed reorganization plan.
  • Detailed analysis of operations and strategic alternatives led to bankruptcy court testimony resulting in several required modifications to the Plan. Company emerged from bankruptcy and became highly successful.

Mid-range Computer Manufacturer with significant European operations

  • Retained by secured creditors to evaluate business viability and develop options for preserving value in the face of loan defaults and a major cashflow crisis. Project included on-site evaluation of subsidiary operations in seven European countries.
  • Although faced with the same unfavorable industry trends as U.S. operations, it was concluded that European operations were viable. A swap of secured debt for ownership of the European subsidiaries was negotiated. Assumed management of a holding company owned by the previous creditors.

Greek Tanker Fleet

  • In reaction to payment defaults 15 days after a debt restructuring, put investigative team in Piraeus Greece to assess business viability and cash flows. Identified operational misrepresentations and fraudulent overstatement of collateral appraisals.
  • Managed world-wide foreclosure actions on 49 vessels in 33 different legal jurisdictions; Reactivated 26 vessel fleet prior to disposition in order to maximize recovery values.