Turnaround Saves $40 Million for Lender

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.

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More

Mark J. Welch

Mark J. Welch, CPA, CTP is a Principal at MorrisAnderson based in Pittsburgh. He has over 20 years in bankruptcy and restructuring experience especially in leadership roles and fiduciary positions with clients. Prior to joining MorrisAnderson, Mark was the Director of Internal Audit at Southern Air Transport, Inc., a mid-sized cargo air-transport airline. He also… Read More