The Secret Sauce Behind DCR’s Successes
With a focus on avoiding bankruptcy, our wins for our clients over the years are based on two principles:
- We have successfully achieved this goal for hundreds of clients over the years saving many real estate portfolios and companies, and
- Our well-developed connections and relationships with professionals in 24 service areas can potentially be the key to avoiding bankruptcy and reputational damage.
Sometimes the Best Solution is Renegotiating Leases
We represented a chain of fast-food restaurants with over 150 locations throughout the United States. The firm initiated a process of renegotiating leases that were above market and a sale of the leases.
We referred the client to a national firm that, among other things, was experienced at renegotiating leases. They helped organize things with our client where the rental rate was above market and monetized leases where the rental rate was below market.
The result was a seven-digit cash infusion into the company.
Replacement Financing and Restructuring
We were working on a matter for a client who desperately needed not only replacement financing, but also needed to increase the amount of total financing. We referred the client to several potential lenders. One lender replaced the existing financing. The other, in return for a higher number of points and interest, made a second priority loan. Using this structure, the amount of the existing financing by a substantial amount compared to the financing was increased which was in default.
This client had an additional issue. To resolve it, we referred the client to a financial advisor/restructuring consultant who assisted in restructuring the company’s finances to enable them to pay, among other things, the added financing costs.
An Expert in Reorganization Saved the Day and Then Some
In a chapter 11 case where an involuntary restructuring of an existing loan was being forced on the lender by a bankruptcy court as a part of a reorganization plan, the primary issues were the terms of the involuntarily restructured loan.
We referred the client to an expert witness. This expert was recognized by the bankruptcy judge as being an expert in the reorganization area with a nationally recognized expertise in the area of appropriate interest rates for the type of loan involved. He testified as to the appropriate rate for a loan having the characteristics of the loan as modified by the Plan. As a result of that expert’s testimony, the court restructured the existing loan with a fixed rate of prime +2 at the time when prime was very low. The restructured loan was assumable, and that fact raised the value of the real property by over 10 million dollars.
The client moved to Nevada and waited to sell the property until his status as a Nevada resident enabled him to avoid California capital gains tax on the sale.
A Win Against the IRS
A recreational vehicle dealer had been profitable for many years, but then it fell on hard financial times and posted substantial losses for a three-year period. This forced the dealer to file a chapter 11 bankruptcy. None of the tax professionals in the case saw any possible way to monetize the recent tax losses.
Fortunately, we have a strong relationship with an individual with a proven track record of causing the IRS to return taxes paid for up to 15 years in the past. In this case, the debtor retained this firm and ultimately received a cash refund from the IRS of over ten million dollars. There are numerous scenarios in which this IRS specialist can create cash tax refunds from the IRS.
Where the right factual situation exists, we will refer the client to this individual, who is compensated by a percentage of cash refunds received from the IRS.
Financial Advisors Often Get Better Results
When a financially troubled business comes to DCR for assistance, it is not unusual for us to recommend the retention of a financial advisor. These professionals virtually analyze every aspect of a client’s business, including its personnel, profitability of product lines sold and the client’s financial relationship with various entities with which the client deals.
The result for our client is often a much more efficient business operation in which several aspects of the business, and the relationship with certain clients which had not created profit for the client, are eliminated.
The financial advisor was also involved in negotiations with the secured creditor. The lender believed what the financial advisor said with respect to the clients’ current and projected finances.
The lender would not have believed the client, prior to this intervention, even if the client was saying the same things as the financial advisor.