Turnaround Saves $40 Million for Lender

Business ServicesLitigation SupportPerformance ImprovementTurnarounds & Restructuring

35M

Annual Sales

80M

in Debt

MBW, Metairie Louisiana

Challenge

Lighting maintenance contract service provider. $35 million sales. $80 million debt. 2,000 contracts across 30,000 locations in 40 states. Secured lender had $80 million loan secured by contract recurring monthly review.

  • Company was cash flow negative as costs to provide maintenance exceeded contractual revenue from bundled equipment sale amortization and maintenance fees.
  • Company filed Chapter 11 to prevent and/or delay lender foreclosure on contract collateral.
  • 30% of accounts had delinquent payments and unsatisfied maintenance service orders.
  • Lender assessed collateral value was under $20 million on a $80 million loan.

Solution

  • Assist lender to get relief from Automatic Stay in Chapter 11 and take control of contract collateral and start to service contracts.
  • MorrisAnderson created a Special Purpose Entity for the ownership of the contract assets.
  • Set up new company to service contracts including:
    • Creation of 3 integrated IT databases (contracts, service, and billings).
    • Establishment of 100% outsourced service capability
    • Creation of call center to handle customer service calls
  • Personal visits to all major dollar delinquent customers to re-establish service and payments.

Results

  • Re-established maintenance service and current payments on over 95% of customer base.
  • Created over $10 million of annual cash flow business.
  • Sold business 2 years later to major competitor. Lender recovered $40 million more (2X) on its loan than original expectations.

Contributors