Background: Ajax Principal, while at while at a major investment bank, managed the proposed acquisition of, and ultimate stalking horse bid in bankruptcy for a residential mortgage company at the beginning of the Global Financial Crisis In a volatile mortgage market, with increasing rep and warranty liabilities, the bank assisted the company with preparing a prepackaged bankruptcy and provided DIP financing.

Restructuring: Managed the due diligence process, including review of all corporate documents and agreements, evaluating the company’s business processes and staff, analyzing the company’s financials (especially its off balance sheet liabilities), and preparing financial projections Developed a mutually acceptable restructuring plan in a rapidly deteriorating financial situation Negotiated a complicated asset purchase agreement as well as a loan agreement for the bank to provide DIP financing to the mortgage company as part of a pre-packaged bankruptcy Oversaw the bankruptcy team, including internal, external and local counsel, and represented the bank in bankruptcy court. 

Outcome: A major hedge fund submitted a higher bid in the bankruptcy auction. Given the substantial decline in the mortgage market during the bankruptcy period, the bank decided that the best outcome for the firm would be not to purchase the company. The bank, therefore, did not increase its bid, and the hedge fund was awarded the company by the court