Advising a Tubing and Casing Manufacturer with Revenue of $120 million in national sales.
The asset-based lender to an $80MM multi-location Buy-Here / Pay-Here auto dealerships and related finance companies engaged MCA Financial to investigate material loan defaults and potential fraud. It was discovered that the company had been repeatedly falsifying its borrowing base, drawing millions of dollars more than permitted by the credit agreement, and using the borrowed money to fund operational losses, owner distributions, and other alleged conversion activities. The borrowers filed a Chapter 11 bankruptcy in an effort to reorganize.
The lender petitioned the bankruptcy court for relief from stay to remove the assets and operations of the related finance companies, which owned and serviced the auto loan portfolio. With the objective of maximizing collateral recovery, MCA Financial was selected to serve as the court-appointed receiver. MCA mobilized quickly to retain key employees and take control of the finance companies’ bank accounts, computer systems, loan receivable portfolio, assets, and associated titles. MCA maximized the collateral value through loan receivable collections, auto repossessions, and sales of inventory, ultimately executing on the sale of the remaining $50 million loan portfolio and recovering a significant portion of the lender’s outstanding loan.