Chief Restructuring Office
MCA Financial’s successful plan led to recoveries for the creditors and relief for the borrower, who had been defrauded by his former employee.
The absentee owner of a once-profitable sub-prime lending operation and rental car franchisee operation hired MCA to investigate unexpected critical liquidity crunches at the two companies. The sub-prime lending operation’s loan receivables exceeded $20MM with borrowers comprising farmers, truckers, and ag businesses. The multi-state rental car franchise’s fleet numbered 300 cars and generated revenue of $25MM annually.
MCA’s experts’ analysis of the companies’ operations and finances discovered a loss of cash stemming from the general manager’s fraudulent actions. Concern of insolvency grew among the companies’ nine secured lenders, whose collateral was unknowingly double (and tripled)-pledged resulted in the need for an independent party to serve as CRO. The banks turned to MCA Financial Group, whose team stepped into an independent leadership role and quickly took control of the companies, managing the cash and running the operations, including the rental car franchises.
MCA developed an effective strategy to maximize recovery for the lenders by negotiating and managing the sale of the rental car franchises and other assets. The rental car business was sold as a going concern for $2MM+, plus the value of the rental cars. The sub-prime lending business was terminated and its loan portfolio was wound down over time. MCA collected on loans, repossessed and sold equipment at auction, and recovered on malpractice and other litigation matters.
A successful Plan led to recoveries for creditors and relief for the borrower, who had been defrauded by his former employee. All banks settled and the client was released from further obligations incurred by the former manager.