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1Q 2017 Representative Engagements
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Justifying Over-advance for Senior Lender
This year’s record-setting rainfall in California has been great for most, but bad for a regional roadwork services company. The frequent weather disruptions resulted in a $1.5 million over-advance on the company’s line of credit. Concerned about its borrower’s ability to pay down the loan, the company’s senior lender called Brandlin & Associates to assess the collateral and management’s ability to:
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- Manage liquidity, including vendor payables and payroll;
- Reduce overhead;
- Collect from slow-paying customers and forecasting cash flows related to joint checks; and
- Retain customers.
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Outcome:
Fortunately, we discovered undervalued and unreported collateral. We worked with management to restructure overhead, reduce payroll and create a realistic forecast of monthly EBITDA demonstrating how the company would pay down its bank over-advance and past-due supplier payables.
With this information, our lender-client restructured the borrowing base, providing the company with the working capital relief it needed until its cash flow benefited from seasonal improvements.
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Quality of Earnings for Stapled Senior Financing
A sponsor asked its senior lender to support the merger of complementary payment processing companies. To assess the sponsor’s pro forma cost savings generated by the synergistic business combination, the lender called Brandlin for a quality of earnings analysis. We quickly conducted a site visit and completed our work, which included:
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- Vetting one-time restructuring charges;
- Assessing pro forma cost savings, including headcount and operating expense reductions; and
- Validating future restructuring charges: infrastructure consolidation, employee severance, and back office consolidation and travel.
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Outcome:
The senior lender’s credit committee used our conclusions in assessing, and ultimately approving, the credit.
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Litigation Support for $2.8 million Employee Fraud Civil Case
When a manufacturer’s liquidity tightened, management suspected that employees and vendors were embezzling from the company. To ensure the substandard financial results were due to fraud and not declining operations, the company’s lender suggested it retain Brandlin to perform a forensic accounting investigation.
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Our investigation revealed an inventory fraud conspiracy among long-term, trusted employees and vendors wherein approximately $2.8 million had been embezzled over a six year period. The defendants had circumvented internal controls upon which management had relied, resulting in substantial overpayments for materials purchased.
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Outcome:
We continue to represent management as an expert witness in its civil case to recover the embezzled assets and restitution from the defendants.
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Save the Date!
2017 8th Annual Conference
June 14-16, 2017
Bacara Resort & Spa
Santa Barbara, CA
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Recent News
April 5, 2017
CFCC: Anatomy of a Workout: Is there a new playbook?
Jeff Brandlin moderated a panel of experts discussing workout loan trends, risks of covenant light and aggressive loan structures and risk v. pricing trends.
March 30, 2017
Century City Bar Assn: 49th Annual Installation Banquet and Awards Ceremony
Brandlin & Associates was a proud sponsor of this annual event.
February 17, 2017
Jeff Brandlin co-authored the article highlighting the risks of EB-5 investment funds and warning signs for managers and investors.
February 14, 2017
Jeff Brandlin and Mark Elletson were panelists discussing the economic and legal impacts of EB-5 loan defaults.
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Brandlin & Associates is an exclusive provider of financial workouts and restructurings, forensic accounting, financial due diligence and litigation support for senior lenders, mezzanine funds, private equity groups, attorneys and middle market companies.
We pride ourselves on offering superior technical expertise, years of practical experience and unparalleled service to decipher financial and operational performance metrics. As a result, our clients are able to make informed decisions in a timely manner.
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Brandlin & Associates
Los Angeles 310.789.1777 |
New York 646.475.8507
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