$85 million legal staffing service providing contract attorneys for complex litigation projects. $25 million debt. Private equity-owned with founder CEO still in control with small equity stake.
- Heavily dependent on NYC and DC financial services litigation demand, which fell quickly with the onset of the Great Recession
- Rapid sales volume decline of 40% with EBITDA falling from $10 million to zero.
- Senior debt at $25 million (down from $40 million) and sub-debt at $20 million.
- Company was significantly over-leveraged.
- CEO didn’t want to downsize operations and wanted lenders to support investment in new electronic data discovery (EDD) business line.
- Morris Anderson convinced the CEO to take $4 million of cost reductions to ensure the business was viable but preserve enough critical mass to expand when the demand for litigation outsourcing expands.
- Morris Anderson mediated a restructuring of the Company such that equity injected $5 million into the Company for adequate liquidity and then split equity fairly with the sub-debt while getting a three-year loan extension from the Secured Lender with adequate covenants.
- Company’s senior debt leverage was reduced to under 4X and Company has adequate liquidity to grow again.
- Company is on solid financial routing and the earnings are steadily improving.