Workouts and Bankruptcy Consulting

Sugarman & Company LLP assists troubled private and public companies to maximize their resources, restructure for profitability or effect an orderly liquidation of assets in bankruptcy or out-of-court workouts. The firm works on behalf of creditors, including financial institutions and creditors committees; debtors, including chief executive officers, other senior management, and boards of directors; and the courts.

We have assisted in the reorganization of over $1 billion of debt.

Among the wide range of services Sugarman & Company LLP provides are:

Crisis & turnaround management
Chief restructuring officer
Business evaluation
Strategy formulation
Going concern analyses
Liquidation analyses
Orderly asset liquidation
Disbursing agent functions
Claim analyses
Cramdown analyses
Plan feasibility analyses

Cash flow analyses
Cost controls
Debt restructuring
Lease renegotiation
Lease termination
Workforce reduction
Creditor negotiations
Fraud investigations
Forensic accounting
Fraudulent conveyances
Preference analyses

Here are a few of our representative cases:

Sugarman & Company LLP was retained to serve as Chief Financial Officer and workout consultants to a multi-million dollar, health care service corporation. As CFO, we restructured the cash management system, worked with the lenders, examined and prepared financial forecasts, and analyzed expenses and construction in progress for cost-cutting recommendations. We also renegotiated $125 million in bank loans to allow the corporation to continue operations and complete the development of a hospital under construction. We negotiated with the general contractor to defer payment until a buyer was found. The original debt was repaid in full, a new loan negotiated, and the company is again profitable.
A $25 million advertising company with offices across the country sought to restructure its debt out of court. As their workout consultants throughout a five-year transformational process, Sugarman & Company LLP successfully negotiated the forgiveness and restructuring of $50 million in debt with three lenders and assisted with the sale of operating divisions. In addition, we provided systems and supervision that helped the company increase its efficiency, including preparing revised projections, implementing cost-cutting measures, comparing weekly cash flow projections against actual results; and assisting in the adoption of a company-wide, automated, financial reporting system. The company was able to restructure its debt and is now a successful, profitable organization.
A group of private investors acquired a grocery chain and wanted to close a losing division. The division's stores were the anchor tenants in seven shopping centers throughout Northern California with a combined lease liability of $30 million. Sugarman & Company LLP analyzed the problem and developed a solution outside of bankruptcy and without litigation. We worked directly with the landlords and found replacement tenants for each property or negotiated termination of the leases for a nominal cost. To accomplish this, we hired local real estate brokers, made lists of potential tenants, and contacted the companies ourselves. We worked closely with counsel well-versed in landlord/tenant law.
In a bankruptcy case involving a 125-room, high-end hotel in Southern California, our mandate was to assist the secured creditor's attorney in evaluating the debtor's plan of reorganization, including assessing the feasibility of continuing to operate the hotel, identifying the appropriate interest rate for post-confirmation loans, and serving as an expert witness on these issues. Toward these ends, we conducted an extensive review of documents, reviewed alleged claims against the property, and visited the site. We evaluated the appropriate interest rate to be utilized in the specific circumstance and contrasted that rate with the debtor's proposal. We also prepared a detailed analysis of the historical operations of the hotel and analyzed the debtor's projections. Ultimately, we found that the plan proposed by the debtor was not feasible. As a result of our testimony and other factors, the debtor's plan was denied and the lender was granted relief from stay.
A national mortgage brokerage company, which acted as the originator of single family home mortgages and wholesalers of loans to lenders, suffered a significant downturn due to the decline in demand for mortgages. When its business dropped from $500 million per month to $50 million, they sought to close down the majority of their 50 offices. Sugarman & Company LLP was hired to help them terminate their lease liability at nominal costs. We worked with the secured and unsecured creditors on claims totaling $75 million and implemented plans that satisfied all parties. Through negotiations, we successfully reduced their lease liability from $6 million to $1 million payable over an eight-month period.