The Detroit Chapter of the TMA has several great events planned this fall, which will allow you to reconnect with peers, grow your network and learn about the latest industry trends. At all of our events, we remain focused on assuring that everyone has a safe and enjoyable experience.
In less than a week, the Mid-America Restructuring Conference (MARC) will be held on September 20 & 21 at the Westin Book Cadillac Hotel in Downtown Detroit and feature a panel of industry titans and two keynotes: David E. Cole, PhD, Chair, Auto Harvest and Building America's Tomorrow; Chairman, Emeritus, Center for Automotive Research; and Prof. Emeritus, University of Michigan Engineering, and James H. I. Weakley, President, Lake Carriers' Association
There are also three other panels planned on the following topics: Post-Pandemic Restructuring, Lenders & Workouts, and Private, Equity & Distressed Investing, plus the highly regarded Capital Showcase Reception that will include over 20 firms and plenty of networking.
A new event is also planned this year: “Dining in the D”. This September 19th event is a progressive dinner featuring four of the top Detroit dining destinations: Cuisine, Chartreuse, BESA and She Wolf. Seats are limited and going fast.
The COVID protocols for the MARC Conference can be found here.
On October 6, we will hold our annual kick-off event at the Detroit Shipping Company a one-of-a-kind facility located in the heart of the Cass Corridor. The Detroit Shipping Company is a 10,000 square foot structure constructed using 21 refurbished shipping containers. The building is two levels, half indoor, and half outdoor, which will provide attendees with an opportunity to network in an open-air environment.
The success of the Detroit Chapter is attributable to a number of people, including our sponsors who help fund our programs and the many people who lead and serve on our programming committee, membership committee, NexGen board and our newly created Diversity, Equity & Inclusion Taskforce. I also want to recognize the contributions and hard work of our Board — Laura Eisele, Eric Grozenski, John Klehm, Glenn Kushiner, Katie Montague, Chuck Mouranie, Sean Pattison, Ted Sylwestrzak, John Trendell, and Amanda Vintevoghel — which has worked extremely hard to make the Detroit Chapter the organization that it is.
I hope you enjoy this Newsletter and look forward to seeing you at our upcoming events. Thank you for your continued support of our Chapter.
COVID-19 Pandemic & Restaurants – What’s Different About Restaurant Restructurings
By Colin McClary, Managing Director and Pat Schuetz, Associate Director
The COVID-19 pandemic has impacted few industries as severely as the restaurant industry. Prior to the pandemic, the industry was nearing record highs in annual sales, with 2020 projected sales of $899 billion, an estimated one million individual restaurant locations and nearly 16 million employees nationwide. The chart below shows actual and projected restaurant industry growth.
Due to the size of this industry and the lending opportunities that it presents, commercial banks and non-bank lenders have significant credit exposure to this sector.
As a result of the pandemic, 2020 sales of $659 billion were only 73% of pre-pandemic projections of $899 billion. Large fast casual chains and quick service restaurant (“QSR”) operations have gained market share due to their ability to simply remain open during the pandemic while leveraging their access to capital and drive-thru operations.
SBA’s Guidance on Requests to Honor SBA’s Guaranty of PPP Loan
The SBA recently issued its Procedural Notice on when a lender may request the SBA to honor its guaranty of a PPP loan. The PPP loan program has been in place for over a year and has provided billions of dollars of assistance to small businesses all over the United States. It is not surprising that some PPP borrowers have encountered continued financial difficulty, in some instances resulting in bankruptcy, dissolution, shutting their doors, or discovery of fraud-related issues. What is a lender to do?
Under the 7(a) program (PPP loans are a special part of the 7(a) loan program), a lender needs to service the PPP loan, just like it would service its other loans. When an SBA 7(a) loan goes into default, the lender typically needs to liquidate collateral, pursue guarantors, obtain judgments or seek recovery through a bankruptcy proceeding before requesting the SBA to honor its guaranty of the loan. These steps make less sense for an unsecured loan, particularly one that may be eligible for 100% forgiveness. Fortunately, the SBA has recognized this in its most recent guidance for PPP loans.
With PPP Over, What’s Next for Business Borrowers?
By Rhett B. Rowe, CEO
Now that funds from the Paycheck Protection Program (PPP) were exhausted as of May, businesses that are still reeling from the economic impact of the pandemic will have to look for other sources of funding.
According to Forbes Magazine, credit unions increased their loan approval rate from 20.3% in April to 20.4% in May 2021. Other non-bank lenders inched up slightly. Institutional lenders approved 23.6% of funding requests in May, up from 23.5% in April. Meanwhile alternative lenders approved 24.3% of funding applications in May 2021, up from 24.0% in the month prior.
Alternative lenders saw a significant increase in approval rates in May while at the same time handling an ever-larger number of loan requests, thanks to the shift towards online finance in the small business space. With the conclusion of PPP, banks are focusing on forgiveness and may not be ready to ramp up small business lending that is not government-backed.
Great Rock Capital has provided $130MM of liquidity and growth capital to middle market companies across the Midwest region over the last 12 months. Blake Kenny, Managing Director of Originations, will expand his coverage into Eastern Canada and continue to cover Michigan & Western Pennsylvania. In addition, the firm looks forward to growing the team by adding a Chicago-based originator to cover the outer-Midwest and work closely with Jim Clifton, Managing Director of Originations.
The TMA Network of Women (TMA NOW) is an affinity group within TMA, created to foster female leadership by creating the premier business development and networking group for women in the turnaround community. TMA NOW aims to provide substantive educational programming and networking opportunities to promote career growth and help women break through the glass ceiling.
TMA NOW strives to create an environment for people to meet and connect with each other, build educational programming at the global and chapter level, and encourage women to engage in leadership positions within TMA and at their firms. To this end, the key goals of TMA NOW that could directly impact you are:
Engage more women in senior leadership positions within our chapter by creating more visibility and awareness of available leadership opportunities
Increase the participation and number of offerings for women's networking events, educational sessions, and professional development opportunities
Offer education and content to female members to promote professional growth
If you are interested in joining, email Deb Kovsky.
Join us Oct. 26-29 at the Grand Hyatt Nashville and online for four days of chances to make new business contacts, see old friends, take in all that Music City has to offer, and just enjoy being together once again!
One of the consequences of remote working has been TMA members not seeing their mailed membership renewal notices, which typically go to the office. Please keep an eye on your membership status and don’t let your membership lapse.
TMA Detroit is dedicated to providing quality content and networking opportunities to our membership both in person and virtually.
As a Detroit member you also receive member pricing to all other chapter events!
Attendance by all individuals, including TMA Members, Chapter Executives, Administrators, and their respective employees and guests (each of the foregoing, collectively an "Attendee") at any event constitutes their legally binding agreement that:
1. They are attending the chapter sponsored event at their own risk;
2. None of the TMA, TMA Global, the venue, the organizer, any attendees, or any of the preceding's respective employees, officers, or board members (each of the preceding, collectively the "Released Persons") are in any way legally responsible if one or more Attendees contracts COVID-19 or any other communicable disease around the time of the event or as a result of attending the event; and
3. Each Attendee waives and releases each Released Person from any all liability if they contract COVID-19 or any other communicable disease around the time of the event or as a result of attending the event.
TMA Learning Link™
TMA Learning Link™ is where to find content and information on topics important to our community in the turnaround, restructuring, and corporate renewal industry. We are proud to offer this new benefit to TMA members.
Starting your career and looking for opportunities to put yourself out there can be an intimidating process. Finding the right place to start and who to speak with can be a challenging task. The TMA nextGen group is specifically designed to help you ease into the Detroit area market for young or new professionals involved in transactional services, legal, turnaround management, commercial and asset-based lending, private equity, consulting, and other financial services.
The goal of our group is to introduce new members in the turnaround community to other similar professionals in social settings along with quality educational events tailored to young professionals.
TMA offers a discounted membership rate for new members ages 40 and under.
Interested in getting involved with nextGen Detroit?
