One of the original and largest pre-settlement advance funding companies was underperforming and in continual financial distress due to its inflexible debt facilities and lack of true equity capital. Frequently, it was forced to sell assets at deep discounts in order to meet its liquidity demands. It was stuck on a treadmill and unable to build value.
Andrew Clark joined this company as an equity partner and completely transformed its capital stack. He sourced and structured nearly $150 million in new debt and equity investments that enabled the company to repurchase many of the asset portfolios it previously sold and to invest in nearly $40 million of new loans to personal injury law firms. The new debt facilities obtained by Mr. Clark were provided by one of the largest and most successful international hedge funds. The facilities provided a marketing-leading advance rate against settlement advance assets while reducing the company’s interest rate by more than 50%.
If your settlement funding or law firm lending business could benefit from new capital, Eastern is here to help.
A large litigation investment fund had multiple loans secured by settlement advance portfolios and legal fee receivables that had entered default. The borrower defaults had triggered an upstream default in the fund’s credit facilities, and the consequences of the default threatened the viability of the fund’s unrelated businesses.
Eastern stepped into the default to act as a “bad bank” by assuming the defaulted loans, related collateral, and all borrower obligations of the fund. This provided the fund immediate relief from the default and removed the threat to its other business lines. Andrew Clark and Rob Bunn worked with the law firm borrower to refinance $17 million of its existing debt and to restructure its operations to increase cash available for debt service by more than $20 million per year. Eastern’s restructuring immediately returned the loan to performing status.
The successful work-out combined with strategically timed asset sales allowed Eastern to repay the loan it assumed from the investment fund in only 13 months, and it collected payments of 2.3x the value of the defaulted loans over the following 4 years.
Eastern is not afraid to work with borrowers or lenders who are in tight spots, and it can provide the creativity and capital you need to get out.