Case Study: Credit Solutions in Support of a Distressed Company
Their secured lender was reducing advance rates and imposing additional reserves, thereby restricting borrowing availability.
As Tiger had historically conducted the appraisals on Loehmann’s, we were called in to assess the company’s situation.
Tiger has sold through over $70 million of Loehmann’s goods at the store level.
Tiger’s Role
Working with a new senior lender, we put together a new $50 million credit facility. Because of the distressed nature of the situation the lender had to stretch the advance rates to provide adequate availability to meet working capital needs and to help effectuate management’s turnaround plan.
Tiger got the new senior lender comfortable in the quality of the underlying collateral. Further, as a show of support, Tiger participated in the new credit facility on a Pari-Passu basis.
Tiger worked with the company and senior lender on closing unprofitable locations, and supported the company through a restructuring plan, which included a plan of reorganization.
The bonds converted their debt into equity, and operated the company for several more years, before encountering additional financial difficulties.
Disposition
At auction, our relationships on the Real Estate and Brand led to recoveries in excess of the secured lender’s debt. As a result, recoveries to junior creditors increased from their expectation of $19 million to over $30 million.