Durkin Group

Field Examination of a Payday Lender

hanee — Mon, 28 Mar 2011 03:31:49 +0000

Durkin Group was engaged by a Senior Lender to perform a recurring field examination on a finance company that provides payday loans. The field examiners reviewed the credit policies and procedures of the finance company and noted that there was an internal policy against loan flipping. It was also not permitted in the Senior Lender’s loan agreement as repeat borrowers who must increase their loan balance to pay off an older one often find themselves in dire circumstances that lead to bankruptcy. During testing, the field examiner noted that there was an excessive amount of loan flipping in violation of the finance company’s policies at several of the branch locations. The Senior Lender was notified and the finance company was instructed to cease flipping loans.

Field Examination of a Factoring Company

hanee — Mon, 28 Mar 2011 03:30:40 +0000

Durkin Group was engaged by a Bank to perform a recurring field examination of a finance company that factors attorney’ legal fees that have become due and payable through pre-litigation settlements. These settlements are usually for personal injury, workers compensation, and class action litigation cases and are typically due from insurance companies and state insurance funds. During testing, the field examiner noted that the finance company had pledged multiple receivables to the Bank for which it had never advanced funds to its client. The Bank was notified that the borrowing base was overstated and the owners of the finance company were required to repay the amount of the collateral shortfall to the Bank.

Securitization Due Diligence

hanee — Mon, 28 Mar 2011 03:28:51 +0000

Durkin Group was engaged by a large commercial finance company to perform pre-funding due diligence on a $600 million securitized accounts receivable pool supporting a $300 million credit facility. Durkin was able to mobilize a team of eight professionals under a tight timeframe and provide a due diligence review for the lead lender and its syndicates. Since the initial examination, Durkin has been engaged to perform two follow-up examinations to validate the securitization pool and monitoring the compliance with the servicing agreement.

Engagement Focus

hanee — Sun, 27 Mar 2011 21:13:04 +0000

During the course of a routine collateral examination for one of our client’s existing borrowers, we discovered various discrepancies with the underlying borrowing base. We determined that the borrower was arbitrarily changing invoice dates on the accounts receivable aging in an attempt to misstate the true availability. Further review by the analyst on site as well as through the efforts of our background investigations group, determined that the aging contained numerous entities that were affiliated by common ownership. Ultimately, we determined that the borrower was actually operating with a substantial over advance. Accordingly, our engagement changed to monitoring and a cash burn assessment.

Businessman’s Review

hanee — Sun, 27 Mar 2011 21:11:52 +0000

The Loan Workout Group of a large commercial bank had a problem loan transferred in from the Corporate Lending Department. To determine the bank’s position and provide current information for decision making, the bank required an immediate assessment of the company’s liquidity position as well as the collateral performance. In conjunction with the field exam, Durkin was engaged to perform a Businessman’s Review of the company. The Businessman’s review encompassed: an evaluation of the short term liquidity, testing of the backlog, a review of financial projections and debt service, and a liquidation analysis. This analysis, along with the root causes provided by Durkin enabled the financial institution to quickly make the necessary decision to mitigate their exposure through a sale of the loan.

Government Contracts

hanee — Sun, 27 Mar 2011 21:10:09 +0000

Durkin Group was engaged by a finance company to complete a survey for a $65 million senior secured credit facility. The credit facility was to provide working capital and fund the acquisition of a company with a concentration in defense contracting. Since the largest exposure of the credit facility centered on federal government accounts receivable, Durkin Group was able to draw on internal resources, experienced in government contracting, to complete the engagement. A full review of the contracts was performed and accounts receivable were tested to ensure that billings were within the terms of the respective contracts.

Survey Examination of a Physician Practice

hanee — Sun, 27 Mar 2011 21:08:13 +0000

A small pediatric medical provider was borrowing from a specialty healthcare lending group and was being overwhelmed with audit time and fees. A lender engaged Durkin Group to perform a due diligence exam on a $2.5 million senior secured credit facility. The Durkin examiner finished the due diligence in significantly less time than the current lender spent on a typical monitoring exam. The company contacted the lender to express their relief at the timing of the engagement and noted that the report accurately represented the company’s operating performance.

Agreed Upon Procedures Engagement

hanee — Sun, 27 Mar 2011 21:06:02 +0000

A publicly traded real estate management company, specializing in nursing home facilities, had an operator who they suspected was not living up to the contractual obligations regarding the upkeep of their nursing homes. The management company engaged Durkin Group to perform a review of capital spending on the 19 facilities run by the operator. The Durkin exam team assisted in formulating the scope and performed the analysis (four years of spending on each of the 19 units). Upon completion, the results of the analysis revealed that multiple units had not achieved the required maintenance and upgrade spending minimums. The report and work papers were used in negotiations with the operator to get the required capital improvements made.

Survey Examination of a Nursing Home Operator with Multiple Locations

hanee — Sun, 27 Mar 2011 21:01:07 +0000

Durkin Group was engaged by a private equity group with limited experience in healthcare lending to complete a survey for a $75 million senior secured credit facility. As the group was trying to attract participants into the deal, the report needed to be comprehensive enough to satisfy specialty healthcare lenders while remaining understandable to general finance companies and banks. The Durkin team used their significant industry experience to perform detailed testing on a large nursing home operator with multiple locations. The engagement was completed in the time frame requested by the equity group and the report was used to successfully recruit potential participants.

Pre-funding Due Diligence for Securitization

hanee — Mon, 01 Nov 2010 22:30:31 +0000