Mark A. Scudder is president of Scudder Law Firm P.C., L.L.O., which
represents trucking and transportation companies in financial and
corporate development transactions, including workouts, amendments,
and refinancings to support turnaround situations. Scudder also has been a
director of several large trucking companies and a publicly traded railroad.
He can be reached at email@example.com or 402-435-3223.
We See Opportunities
Where Others See Issues
Successful companies take advantage of the opportunities that challenging times
present. But growing companies often face financial issues in times of change.
It takes a knowledgeable view to see beyond fixed formulas or capital ratios
to fully comprehend the complex financial needs of businesses. For the past
75 years, mid-size and large businesses have relied on Rosenthal & Rosenthal to
manage their accounts receivable and to provide timely financing for growth.
Business owners and managers have access to the key decision makers, which enables
them to obtain quick and informed responses to their most pressing business needs.
Senior Secured Credit Facilities—Precious Metal Leases—Specialty Lending
Acquisition Financing—Letters of Credit
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A strong understanding of the
company's business, as well as
the nature of its investments, fixed
charges, cash expenses, and asset
replacement schedules was necessary
to draft a workable covenant
package. From a legal perspective,
documentation was needed for:
1 Waiver of past defaults under the credit agreement and
at least some of the secured
2 Consent of the revolving lender to a deferral of vendor payments.
The approval was necessary to avoid
creating an event of default linked to
failure to pay debts in the ordinary
course of business by deferring the
3 Amendment of inancial covenants
4 Delay of the audit delivery requirement to allow completion
of the financial underpinnings of the
turnaround and completion of an
5 Modification of the principal and interest payment provisions
under a dozen or more secured
equipment financing agreements and
leases, and consulting arrangements
In this situation, the legal requirements
involved comprehensive coordination
in addition to targeted drafting.
Correctly analyzing dozens of financing
documents, explaining the required
amendments and waivers to multiple
lenders, addressing them in the proper
order, resolving cross-default issues, and
harmonizing the new covenants across
multiple instruments required a strong
technical understanding. It also required
the ability to explain, to persuade, and
to distinguish various alternatives.
In the end, the company was able
to create more than $10 million of
additional liquidity, retain key vendor
relationships, stabilize its business, and
position itself for a long-term refinancing
as the global credit crisis receded.
A Team Effort
As the two case studies addressed in
this article demonstrate, a coordinated
effort among operational, financial,
and legal teams can afford a company
a powerful set of tools for setting the
stage for a successful turnaround. J