Case Studies

DUE DILIGENCE CASE STUDIES

Client:	Private Equity Investor & Mezzanine Lender
Company:	Manufacturer of Sporting Goods
Revenue:	$60,000,000
Equity Investment:	$33,200,000
Market Capital:	$35,000,000
Existing Loan:	$12,000,000
New Capital:	$20,000,000

• Validated the business case for acquisition and privatization of 2 publicly held distributor / manufacturers.
• Completed diligence on both the acquisition and the acquiring portfolio.
• Identified non-recurring EBITDA adjustments totaling $2.9 million and EBITDA synergy savings from consolidation of $3.3 million.
• Determined acquisition integration timing of EBITDA savings.
• Identified asset-based lending constraints associated with the Company’s foreign inventory purchases.

Client:	Mezzanine Lender
Company:	Container Manufacturer
Revenue:	$200,000,000
Equity Investment:	$25,000,000

• Identified understatement in accounts receivable of $400,000.
• Researched and documented company’s contractual ability to pass-through raw material price increases.
• Identified differences in GAAP reporting procedures between company and foreign parent.
• Evaluated standard costing systems and valuation differences between foreign and domestic entities.
• Commented on due diligence report generated by “Big 4” accounting firm and identified material discrepancies in EBITDA roll-forward computation.
• Analyzed the impact of the Puerto Rico tax rate on the overall effective U.S. tax rate for “Newco”.

Client:	Senior & Mezzanine Lenders
Company:	Lumber Distributor
Revenue:	$92,000,000
Loan Size:	$22,000,000
Senior Loan:	$6,000,000
Equity:	$500,000

• Determined internal controls to be inadequate, resulting in inaccurate interim financial statements.
• Discovered an existing senior lien relating to a significant segment of the business and secured by a performance bond. A unique loan structure was required to carve out collateral behind performance bond; otherwise, the existing lien could trump the new senior loan.
• Generated 3 years of combined income statements for 3 related companies previously not combined.
• Created a combined, trailing 12 months income statement and EBITDA schedule.
• Identified inefficient sales bidding process.
• Determined current controller incapable of assuming role of CFO.
• Discovered potential risks related to accounting software.

Client:	Private Equity Investor
Company:	Professional Cleaning Services Provider
Revenue:	$5,000,000
Equity Investment:	$15,000,000

• Conducted pre- acquisition due diligence on behalf of equity investor.
• Identified non-recurring EBITDA adjustments totaling $2.3 million.
• Identified inadequacy of controls over master franchise fee reporting; suggested cost-effective procedures to minimize exposure of underreported franchise income.
• Identified improper deferred revenue reporting and adjusted earnings in accordance with GAAP.
• Evaluated proprietary software management system and identified insufficient controls; assessed timing of rollout of future accounting modules.
• Evaluated the impact of a qualified stock purchase and possible §338 election.

Client:	Mezzanine Lender
Company:	Lumber Distributor
Revenue:	$110,000,000
Equity:	$23,000,000
Revolver Credit:	$6,500,000
Term Loan:	$45,000,000

• Consolidated 3 separately reported companies for current year and 2 previous years. Identified and eliminated intercompany transactions.
• Re-calculated EBITDA on a consolidated basis.
• Scheduled the trailing twelve months P&L for 3 companies, created pro-forma adjustments, determined normalizing entries and re-calculated profit sharing contribution.
• Identified internal control issues related to material amounts of sales and cost of sales allocated to improper periods.
• Identified other accounting and internal control issues that rendered the interim financial statements unreliable.

Client:	Senior Lender
Company:	Manufacturer and Distributor of Residential and Commercial Doors
Revenue:	$124,000,000
Loan Size:	$10,000,000

• Saved company approximately $1,000,000 in tax liability by evaluating the capitalization policy of manufacturing overhead.
• Identified benefits of integrating inventory and general ledger software packages.
• Created inventory turnover report to manage purchasing efforts and isolate slow moving products.
• Assisted management in their search for new outside accountants.

Client:	Mezzanine Lender
Company:	Computer Hardware and Proprietary Software Developer
Revenue:	$118,000,000
Equity Investment:	$20,000,000

• Determined accounts receivable reserve understatement of $2,300,000.
• Surfaced concerns regarding the lack of knowledge and understanding of the company’s business by the financial personnel.
• Uncovered material internal control weaknesses relating to revenue recognition.
• Initiated the creation of software programs to capture revenue transactions on a timely and accurate basis.
• Developed historical accounts receivable write-offs.
• Identified various service provider partners and locations within the US that had higher than normal rate of accounts receivable write-offs.
• Created method of estimating bad debt reserve and identifying potential uncollectible accounts receivables.
• Implemented procedures and timing guidelines to perform monthly “close” and instituted procedures to analyze each balance sheet account.

Client:	Principal
Company:	Fuel Sales & Convenience Store Operator
Revenue:	$97,000,000
Loan Size:	$7,500,000

• Conducted financial due diligence to assist with stock acquisition.
• Ascertained inadequacies of EBITDA “add backs” totaling $600,000.
• Identified $265,000 of downward adjustments to EBITDA, which resulted in a 38% decrease in the target’s purchase price.
• Discovered material overstatement in reported inventory balance as much as $38,000.
• Prepared pro-forma financial statements.
• Identified purchase price adjustments that would impact cash balance and require reimbursement by the seller.
• Prepared adjustment schedules to reflect the fair market value of the current lease payments.
• Assessed competency of the accounting department.

PORTFOLIO COMPANY REVIEWS CASE STUDIES

Client:	Senior Lender
Company:	Kitchen & Bath Textile Products Manufacturer and Distributor
Revenue:	$70,000,000
Loan Size:	$11,000,000

• Uncovered “pre-billings” of $1,400,000.
• Identified $3,300,000 of ineligible inventory on the borrowing base certificate.
• Detailed a $1,900,000 understatement in accounts receivable reserve.
• Determined incorrect recording, resulting in cash shortfall of over $1,000,000.

Client:	Senior Lender
Company:	Commercial Printing and Graphic Services
Revenue:	$30,000,000
Loan Size:	$15,000,000 Term Loan $3,000,000 Revolver

• Evaluated borrowing base reports, monitored over-advance use, and identified ineligibles in borrowing base certificates totaling $1,800,000.
• Implemented a 13-week cash flow forecasting system maintained by management and monitored by B&A.
• Analyzed and recommended various methods to improve the Company’s cash flow.
• Assisted management in establishing appropriate internal controls for billing, production and shipping activities.
• Stabilized information flow and established integrity of data going to the Lender.
• Reinforced and monitored implementation.

Client:	Senior Lender Mezzanine Lender
Company:	Meat & Poultry Processor & Distributor
Revenue:	$65,000,000
Loan Size:	$20,000,000

• Discovered and identified management personnel responsible for fraudulent reporting in the borrowing base certificate.
• Created and implemented daily cash management reporting system.
• Prepared and integrated (i.e., balance sheet, cash flow and P&L) monthly budgeting system and procedures.
• Established 13-week cash forecasting system and methodology to compare with budgeting system.

Client:	Mezzanine Lender
Company:	Natural Foods Producer & Distributor
Revenue:	$40,000,000
Loan Size:	$8,000,000

• Created 13-week cash forecasting system to be used and maintained by management.
• Assisted management with evaluating viability and ability to service debt.
• Evaluated benefits of integrating the Company’s three divisions into one computer system.
• Analyzed the commission policy and structure, and recommended improvements for the Company’s independent sales brokers.
• Reviewed accounts receivable and accounts payable for trends, potential cash sources, and savings.
• Identified various methods to improve cash flow.

WORKOUTS CASE STUDIES

Client:	Senior Lender Eleven Participants
Company:	Health & Beauty Aids, Fragrance & Pharmaceuticals Distributor
Revenue:	$600,000,000
Loan Size:	$200,000,000

• Identified fraud totaling $1.2 billion and the various schemes supporting it.
• Provided evidentiary trail to the SEC, USPI and the US Attorney resulting in arrests of perpetrators.
• Identified impact of fraud on lenders’ reported collateral.
• Assisted counsel with the identification of “insiders” and “outsiders” who participated in the fraud.
• Assisted counsel in the development of various theories and related documentation to maximize recovery.

Client:	Senior Lender
Company:	Manufacturer of Sporting Goods
Revenue:	$35,000,000
Loan Size:	$30,000,000

• Identified $18.5 million of accounts receivable fraud comprised of: $5.9 million of ineligible consignment sales; $4.7 million of phony billings; $5.9 million of invoice refreshing; and, $2.0 million of other financial reporting fraud.
• Identified fraud’s impact on lender’s reported collateral.
• Identified audit failures of Company’s independent auditors.

Client:	Senior Lender Six Participants
Company:	Supermarket Supplier
Revenue:	$400,000,000
Loan Size:	$45,000,000

• Evaluated EBITDA and reduced components reported at $21,000,000 to $7,500,000.
• Evaluated EBITDA changes to determine whether adjustments were recurring or 1-time events; reconciled to audited financials.
• Evaluated monthly and year-end financial statement closing procedures.
• Modified internal processes to ensure accuracy of borrowing base reports.
• Evaluated procedural controls over customer returns.
• Investigated propriety of inventory costing methods.
• Reviewed interim and periodic physical inventory procedures; booked required adjustments.

Client:	Senior Lender Agent Three Participants
Company:	Food Manufacturer and Distributor
Revenue:	$250,000,000
Loan Size:	$50,000,000

• Uncovered borrower’s 10-year scheme to defraud $50,000,000 from lenders.
• Identified $7,000,000 of funds diverted to principals.
• Analyzed management’s adjustment of $46,000,000 of the total $58,000,000 of accounts receivable presented in borrower’s borrowing base certificate.
• Evaluated sales documentation and related evidence to determine validity and collectibility of the $46,000,000 of adjusted accounts receivable balances.
• Analyzed management’s adjustment of $12,000,000 of the total $26,000,000 of inventory presented in borrower’s borrowing base certificate.
• Developed daily cash, accounts receivable and inventory roll-forward procedures and controls to establish integrity of daily collateral reports.
• Established daily controls to monitor inventory movement, sales, and collections.

Client:	Senior Lender
Company:	Textile and Clothing Importer
Revenue:	$80,000,000
Loan Size:	$25,000,000

• Uncovered methods used by owner to defraud lender by $20,000,000, including falsified Letters of Credit (L/C) purchases, sales and cash receipts.
• Located evidence to support claims against former lender and borrower’s outside accountants.

Provided analysis to counsel on legal matters such as account debtor, third party inventory warehousing services, reclamation issues, etc.

• Provided evidentiary support to reject or cancel open L/C commitments.
• Performed assistance on accounts receivable, resulting in collections of approximately $1,400,000.
• Discovered fraudulent reporting of shipments on borrowing base certificate.
• Performed site visits to 3rd party warehouse and consolidated inventory at a neutral warehouse location.
• Liquidated the FF&E and closed the borrower’s premises.

Client:	Mezzanine Lender
Company:	Manufacturer of Point of Purchase Displays
Revenue:	$30,000,000
Sub Debt:	$4,000,000
Preferred Stock:	$2,500,000

• Discovered that the majority owner had caused the Company to purchase all raw material from an affiliated company controlled by self at prices in excess of market values. These actions placed Company in violation of loan covenants.
• Discovered that the majority owner ordered over $3.7 million of cash received from trade receivables to be forwarded to an affiliate company, resulting in a loan receivable and an abrogation of existing covenants.
• Discovered that the majority owner had been allocating in excess of $3 million of SG&A costs from an affiliate company over a 4-year period to the Company. This negatively impacted the results of operations, requiring the Company to borrow money to meet cash shortfalls from operations and further breached standing covenants.

Client:	Senior Lender
Company:	Plastic Bag Manufacturer
Revenue:	$75,000,000
Loan Size:	$31,000,000

• Identified inventory overstatement requiring the restatement of audited financial statements, creating an unexpected over-advance on the borrowing base certificate.
• Discovered erroneous finished goods inventory costing procedures and created an accurate valuation methodology.
• Implemented internal control procedures for both the monthly physical inventory count and the purchasing / cash disbursement systems.
• Created and implemented the monthly budget and forecasting procedures, including an integrated cash budgeting and 13-week rolling cash flow process.
• Developed daily inventory roll forward reporting procedures and controls, and implemented a daily cash management system.

Client:	Senior Lender
Company:	Computer Parts Distributor
Revenue:	$180,000,000
Loan Size:	$22,000,000

• Reconciled borrowing base certificate schedules submitted to lender with Company’s computer generated reports and identified various techniques used by borrower to overstate both accounts receivable ($11,000,000) and inventory ($5,000,000).
• Uncovered diversion of funds of approximately $7,000,000.
• Identified “off book” bank accounts.
• Identified over $1,000,000 of invoices which were “refreshed” by management in order to increase its borrowing base certificate.
• Analyzed bank accounts for preference payments, sources of deposits, and other unusual transactions.
• Analyzed financial statements, data and subsequent transactions to compile amounts owed from related parties.
• Documented affiliate activities.
• Evaluated appropriate inventory records to determine correct valuation.

INSOLVENCY AND REORGANIZATION SERVICES CASE STUDIES

Client:	Senior Lender Agent Three Primary Participants
Company:	Paper Converter & Manufacturer
Revenue:	$550,000,000
Loan Size:	$150,000,000

• Detailed and documented fraudulent sales submitted to lender totaling $18,284,000.
• Accumulated back-up documentation supporting fraudulent “bill and hold” sales totaling $28,500,000.
• Gathered supporting documentation regarding “refreshing” or “ever-greening” of invoices totaling $8,100,000.
• Discovered over-valuation of finished goods inventory of $30,000,000.
• Analyzed 53 bank accounts over 3 months for preference payments, sources of deposits, and other unusual transactions.
• Established cash controls and cash operating projection system.

Client:	Equity Sponsor
Company:	Manufacturer and Marketer of Polypropylene Storage Products
Revenue:	$43,000,000
Equity Investment:	$40,000,000
Loan Size:	$48,900,000

• Identified fraudulent reporting and methodology used to prepare false interim financial statements.
• Prepared YTD financial statements to reflect accurate balances, cashflows, and operating results.
• Adjusted EBITDA from a positive $7,000,000 to a negative $2,000,000.
• Identified an additional $1,500,000 under-reserve in accounts receivable and inventory.
• Calculated an additional accounts receivable reserve need of $500,000.

Client:	Senior Lender Agent Two Participants
Company:	International Consumer Products Distributor
Revenue:	$200,000,000
Loan Size:	$70,000,000

• Designed, installed, and monitored cash management systems and procedures.
• Evaluated company’s weekly cash receipts, disbursements and funding requirements for lending group.
• Prepared detailed balance sheet, P&L, and cashflow projections for the forthcoming fiscal year.
• Established 13-week cash forecasting system and integrated with detailed projections.
• Prepared profitability analysis of major customers.
• Represented lenders and monitored Chapter 7 liquidation.

Client:	Senior Lender Agent Bank & Three Participants
Company:	Food Manufacturer and Distributor
Revenue:	$250,000,000
Loan Size:	$50,000,000

• Analyzed management’s adjustment of $46 million of the total $58 million of accounts receivable presented in borrower’s borrowing base certificate.
• Evaluated sales documentation and related evidence to determine validity and ability to collect the $46 million of adjusted accounts receivable balances.
• Analyzed management’s adjustment of $12 million of the total $26 million of inventory presented in borrower’s borrowing base certificate.
• Identified over $1,000,000 of invoices which were “refreshed” by management in order to increase its borrowing base certificate.
• Developed daily cash, accounts receivable and inventory roll-forward procedures and controls to establish integrity of daily collateral reports.
• Established daily controls to monitor inventory movement, sales, and collections including a 13-week cash flow forecasting system maintained by management and monitored by B&A.

Client:	Senior Lender
Company:	Textile and Clothing Importer
Revenue:	$80,000,000
Loan Size:	$25,000,000

• Assisted in collecting approximately $1,400,000 of accounts receivable.
• Liquidated FF&E and closed borrower’s premises.
• Visited 3rd party warehouses and consolidated inventory to a neutral warehouse.

Client:	Senior Lender
Company:	Computer Parts Distributor
Revenue:	$180,000,000
Loan Size:	$22,000,000

• Reconciled borrowing base certificate schedules submitted to lender with Company’s computer generated reports and identified various techniques used by borrower to overstate both accounts receivable ($11,000,000) and inventory ($5,000,000).
• Uncovered diversion of funds of approximately $7,000,000.
• Identified “off book” bank accounts.
• Identified over $1,000,000 of invoices which were “refreshed” by management in order to increase its borrowing base certificate.
• Analyzed bank accounts for preference payments, sources of deposits, and other unusual transactions.
• Analyzed financial statements, data and subsequent transactions to compile amounts owed from related parties.
• Documented affiliate activities.
• Evaluated appropriate inventory records to determine correct valuation.

LITIGATION SUPPORT & FORENSIC ACCOUNTING CASE STUDIES

Client:	Senior Lenders Agent and Three Primary Participants
Company:	Paper Converter & Manufacturer
Revenue:	$550,000,000
Loan Size:	$150,000,000

• Uncovered diversion of funds of approximately $29 million.
• Identified “bill and hold” invoices of $21 million.
• Discovered over-valuation of finished goods inventory of $30 million.
• Identified and quantified unprocessed credit memos of $8 million.
• Analyzed 53 bank accounts for preference payments, sources of deposits and other unusual transactions.
• Reconciled and verified borrowing base certificates provided by the Company to lenders.
• Established cash receipts projection system.

Client:	Senior Lender Eleven Participants
Company:	Health & Beauty Aids, Fragrance & Pharmaceuticals Distributor
Revenue:	$600,000,000
Loan Size:	$200,000,000

• Identified fraud totaling $1.2 billion and the various schemes to support this fraud.
• Provided evidentiary trail to the SEC, USPI, and the US Attorney resulting in arrest warrants of principals.
• Identified impact of fraud on lenders’ reported collateral.
• Assisted counsel with the identification of “insiders” and “outsiders” who participated in the fraud.
• Together with counsel, correlated discovered fraud into audit deficiencies.
• Worked with counsel to develop various theories and related documentation to maximize recovery from insurance company and outside auditors.
• Helped counsel to draft complaints against the company’s auditors.
• Participated in preparation for and deposition of auditors.
• Compiled underlying data and prepared insurance loss claim.

Client:	Senior Lender Agent Bank & Three Participants
Company:	Food Manufacturer and Distributor
Revenue:	$250,000,000
Loan Size:	$50,000,000

• Uncovered borrower’s 10-year scheme to defraud $50 million from lenders.
• Identified $7 million of funds diverted to principals.
• Analyzed management’s adjustment of $46 million of the total $58 million of accounts receivable and $12 million of the total $26 million of inventory presented in borrower’s borrowing base certificate.
• Assisted counsel in correlating discovered fraud into audit deficiencies related to financial statements provided to lenders.
• Together with counsel, drafted complaints against and prepared and participated in depositions of the company’s auditors.
• Assisted counsel in winning the largest recovery in the case, a settlement adverse to the Company’s auditors arising from the lender’s reliance on their negligent misrepresentations.

Client:	Mezzanine Lender
Company:	Manufacturer
Revenue:	$30,000,000
Loan Size:	$5,000,000
Preferred Stock:	$3,000,000

• Discovered and documented fraudulent activities conducted by majority owner whereby approximately $4 million was redirected to another company owned by majority owner.
• Provided affidavits to the courts explaining our findings.
• Assisted counsel with the preparation of their case and cross-examination of witnesses.
• Provided expert testimony on behalf of the minority owner and lender.
• Court ruled in favor of minority owner and lender resulting in the payoff of loans, accrued interest, buyout of the minority equity plus a normal return on investment.

Client:	Senior Lenders
Company:	Computer Parts Distributor
Damages:	$3,000,000 to $9,000,000

• Provided expert testimony related to non-GAAP methods of revenue recognition used by defendant to defraud plaintiff.
• Provided expert testimony related to disclosures in defendant’s financial statements that support contractual positions taken by plaintiff.
• Provided expert testimony related to costs capitalized by defendant that support consideration provided by plaintiff under term of contract.

Client:	Senior Lender
Company:	Electronic Components Manufacturer and Distributor
Revenue:	$300,000,000
Loan Size:	$25,000,000

• Discovered, documented and proved $20 million of fraudulent activities by borrower, including: check kiting, inventory and accounts receivable cycling with collusive related parties, and iterative purchasing and selling of non-existent inventory.
• Identified $1 billion in fraudulent accounts receivable and related payments designed to defraud creditors to related parties of an aggregate $100 million.
• Provided comprehensive evidential packages and forensic analyses to counsel to prosecute claims against (1) the owners for fraud and (2) the debtor’s auditors for negligent misrepresentation.
• Provided expert testimony for a State Superior Court lawsuit and for core Bankruptcy Court matters.
• Provided trial exhibits to counsel to graphically summarize and simply represent the complex forensic findings of an extensive investigation into fraud, concealment and misrepresentation.
• Established that the debtor was insolvent when it entered into a loan and security agreement with lender, more than a year prior to its bankruptcy petition.
• Undertook a liquidation analysis. Performed a physical inventory and prepared the debtor for liquidation by auction.
• Organized and supervised security and private investigation activities producing extensive ex parte evidence of fraud and other bad acts including contemporaneous violations of Court orders, lawful stipulations and debt covenants.

Client:	Senior Lender
Company:	Textile and Clothing Importer
Revenue:	$80,000,000
Loan Size:	$25,000,000

• Uncovered methods used by owner to defraud lender of $20 million, including falsified Letters of Credit (L/C) purchases, sales and cash receipts.
• Located evidence to support claim against former lender.
• Discovered fraudulent inventory shipments and shipments at values inflated by at least 100% on borrowing base certificates.
• Developed evidentiary data and exposed auditing deficiencies to support claim against borrower’s outside accountants for opinions on prior years’ financial statements.
• Assisted counsel in drafting complaints against the company’s auditors.
• Provided litigation support services in lawsuits against auditors.
• Advised counsel regarding other third-party claims.
• Provided evidentiary support for the rejection or cancellation of open L/C commitments.
• Assisted in collecting over $1 million of accounts receivable.
• Liquidated FF&E and closed borrower’s premises.
• Inspected 3rd party warehouses and consolidated inventory to a neutral warehouse.

ACCOUNTING MALPRACTICE CASE STUDIES

Client:	Senior Lender Agent and Three Primary Participants
Company:	Food Manufacturer and Distributor
Revenue:	$250,000,000
Loan Size:	$50,000,000

• Uncovered borrower’s 10-year scheme to defraud $50 million from lenders.
• Assisted counsel in correlating discovered fraud into audit deficiencies related to financial statements provided to lenders.
• Together with counsel, drafted complaints against and prepared and participated in depositions of the company’s auditors.
• Assisted counsel in winning the largest recovery in the case, a settlement adverse to the Company’s auditors arising from the lender’s reliance on their negligent misrepresentations.
• Identified $7 million of funds diverted to principals.
• Analyzed management’s adjustment of $46 million of the total $58 million of accounts receivable and $12 million of the total $26 million of inventory presented in borrower’s borrowing base certificate.
• Evaluated sales documentation and related evidence to determine validity and collectibility of the $46 million of adjusted accounts receivable balances.

Client:	Senior Lender Eleven Participants
Company:	Health & Beauty Aids, Fragrance & Pharmaceuticals Distributor
Revenue:	$600,000,000
Loan Size:	$200,000,000

• Identified fraud totaling $1.2 billion and the various schemes to support this fraud.
• Provided evidentiary trail to the SEC, USPI, and the US Attorney resulting in arrest warrants of principals.
• Identified impact of fraud on lenders’ reported collateral.
• Together with counsel, correlated discovered fraud into audit deficiencies.
• Helped counsel to draft complaints against the company’s auditors.
• Participated in preparation for and deposition of auditors.
• Assisted counsel with the identification of “insiders” and “outsiders” who participated in the fraud.
• Worked with counsel to develop various theories and related documentation to maximize recovery from insurance company and outside auditors.
• Compiled underlying data and prepared insurance loss claim.

Client:	Senior Lender
Company:	Electronic Components Manufacturer and Distributor
Revenue:	$300,000,000
Loan Size:	$25,000,000

• Discovered, documented and proved $20 million of fraudulent activities by borrower, including: check kiting, inventory and accounts receivable cycling with collusive related parties, and iterative purchasing and selling of non-existent inventory.
• Identified $1 billion in fraudulent accounts receivable and related payments designed to defraud creditors to related parties of an aggregate $100 million.
• Provided comprehensive evidential packages and forensic analyses to counsel to prosecute claims against (1) the owners for fraud and (2) the debtor’s auditors for negligent misrepresentation.
• Provided expert testimony for a State Superior Court lawsuit and for core Bankruptcy Court matters.
• Provided trial exhibits to counsel to graphically summarize and simply represent the complex forensic findings of an extensive investigation into fraud, concealment and misrepresentation.
• Established that the debtor was nearly insolvent when it entered into a loan and security agreement with lender, more than a year prior to its bankruptcy petition.
• Organized and supervised security and private investigation activities producing extensive ex parte evidence of fraud and other bad acts including contemporaneous violations of Court orders, lawful stipulations and debt covenants.

Client:	Senior Lender
Company:	Textile and Clothing Importer
Revenue:	$80,000,000
Loan Size:	$25,000,000

• Uncovered methods used by owner to defraud lender of $20 million, including falsified Letters of Credit (L/C) purchases, sales and cash receipts.
• Located evidence to support claim against former lender.
• Discovered fraudulent inventory shipments and shipments at values inflated by at least 100% on borrowing base certificates.
• Developed evidentiary data and exposed auditing deficiencies to support claim against borrower’s outside accountants for opinions on 2000 and 2001 financial statements.
• Assisted counsel in drafting complaints against the company’s auditors.
• Provided litigation support services in lawsuits against auditors.
• Advised counsel regarding other third-party claims.
• Provided evidentiary support for the rejection or cancellation of open L/C commitments.
• Assisted in collecting over $1 million of accounts receivable.