3. Describe the impact of the firm in the restructuring industry. This section accounts for 40% of the entire score.
Tortola believes that by being able to answer ‘yes’ to the 3 questions below, the greatest impact to our restructuring clients will be realized:
- Have we been able to take a circumstance that was contentious, where value was eroding, where many had given up, and create some clarity, bring stability, and bring credibility? Or most importantly, create value rather than destroy it or simply bleed it with fees?
- Have we conducted ourselves with integrity and transparency and have we been able to keep our ethical compass, as well as our personal moral compass, pointed right?
- In an industry wherein it is very easy to become jaded, have we been able to interact with the stakeholders and constituents of a distressed circumstances with a degree of civility and respect for the path that has led them to us?
Tortola has been a trusted resource for Companies, Law Firms, CPA Firms, Wealth Management Firms and Banks to help understand complex and murky circumstances swiftly and transparently, and to get involved deeply and effect meaningful change. Even though operational experience is critical, and even though a thorough knowledge of business is critical, sometimes the most elemental parts of turnaround are communicating honestly, directly, and thoroughly with the stakeholders, and bringing credibility to a circumstance that suffers from a crisis of confidence.
Some specific impacts related to Tortola’s turnaround experience include:
- Tortola was engaged by a small business with 40 employees and 4 million in revenue. The business owed hundreds of thousands in 941 debt, 100’s of thousands in State Sales tax, landlord was moving toward eviction, equipment leasing companies were moving to reposes major equipment, vendors had placed them on COD, and their senior bank had started foreclosure. Tortola advised them in preparation for a Chapter 11 filing, served as Financial Advisors to the debtor during the 11, achieved a confirmed plan, and the company prospered. Tortola completely retooled their operations from the bottom to the top. Tortola has remained involved and actively engaged on a weekly basis. The Turnaround has come full circle this year with the company achieving 11 million in sales with 18% EBITDA, nearly 90 employees, and the owner paying herself over $1 million and putting the company up for sale for more than $10 million (current engagement).
- Tortola was engaged by a refrigerated trucking company. Trade vendors were stretched and some had placed the business on COD. The senior bank was threatening foreclosure, and the primary leasing company for the tractors was threatening repossession. Because the owner had pledged his entire personal stock account as collateral over a series of forbearance agreements prior to Tortola’s involvement, Chapter 11 was not an option. Tortola negotiated a consensual out of court restructuring with all creditors as well as new forbearance agreement with the senior lender, retooled the operations of the company, and worked for 2 years to string together 8 quarters of profitability. Finally, Tortola engineered the sale of a majority of the business to a flatbed trucking company/strategic buyer in the area. All debts were paid and the owner now runs the refrigerated division (engagement completed with final membership change from the sale in the winter of 2014/2015).
- Tortola was engaged by one of the 10 largest masonry contractors in the country to assist with a pension fund withdrawal liability resulting from the contractor’s non-renewal of a collective bargaining agreement with the local Union. With approximately 400 jobs at stake in this 50 year old company, the business was facing more than 10 million in payments for the penalties from the international pension fund. The liability prevented the business from getting a clean audit which caused a cascade of problems including the loss of bonding and the calling of its letters of credit related to its captive workers compensation arrangement. Tortola worked for nearly three years to negotiate with the banks, to shore up the captive insurance program for the business, to secure surety bonding on the nonstandard market, to communicate with General Contractors and Developers, and to negotiate with vendors. Ultimately, a carefully planned Chapter 11 was filed in January of 2015 and in a rare example of a construction company surviving a bankruptcy, a plan was confirmed in the fall of 2015. The case was contentious, and Tortola had to provide expert testimony in court. A competing Turnaround Firm in the area was hired by the Pension Fund to refute Tortola’s analysis but lost on every count. Law firms from DC and other parts of the country representing the Union and the Union Pension Fund objected at nearly every turn (Confirmation Date of the plan was August 17, 2015).
- Tortola was engaged to assist a business in the large video screen and LED market. The business supplied nearly all of the large screens for the Summer Olympics and Winter Olympics over the last decade as well as supplied the screens for multiple touring music artists, large permanent installations in Universities such as Stanford, and outdoor advertising. The senior debt was with a bank in Arizona, but multiple other large creditors in Asia and the US were involved. Collateral was scattered across the country; a canyon in Arizona, a commercial building in Nashville, a farm in Kentucky, outdoor advertising video screens in Mexico, and residential real estate in Ohio. Tortola was able to negotiate forbearance agreements with all of the creditors and strike an out of court settlement. Over an 18 month period, Tortola was able to liquidate collateral and pay off creditors and place the business on a path to prosperity (final resolution of the remaining debts was reached in the Spring of 2015).
- Tortola was engaged by a business that operated two car washes in Nevada. The business had purchased land at the height of the real estate bubble in Las Vegas, had over-spent on construction, and had an expensive dispute and eventually separation from the franchisee. The SBA was involved, and there were mechanics liens on the properties. With nearly $6 million in debt, the business was facing collapse. Tortola negotiated a series of forbearance agreements and the car washes were slowly recovering. Then, the primary bank holding the debt failed and the FDIC took over the credit. Tortola then helped the business prepare for a Chapter 11 filing. Two separate legal entities filed and the cases moved slowly through the courts. Finally, after more than 5 years of work, the cases were resolved and the car washes were returned to health (sale of the car washes concluded in the summer of 2015).