Spotlight on Structuring

In the aftermath of the 2008 recession, a business owner’s manufacturing businesswas struggling and was not profitable for several years. With negative financialcovenants and mounting losses, its credit facility was pulled by the bank and led toan onerous forbearance agreement. Lack of liquidity eventually exacerbated poorbusiness financial conditions. The continued financial bleeding spread to theowner’s personal finances leaving him facing foreclosure on his residence.

With challenging personal credit and insufficient personal income, the financingprospects looked indeed dire. No bank would provide financing given the negativeaspects of the credit. Through a referral, the borrower came to Nova for advice.

By employing creative structuring techniques, such as escrowing futuremaintenance, real estate taxes and debt service payments, Nova was able to providea solution quickly and the borrower was extended a $6,150,000 bridge loan torefinance all mortgages, pay-off liens and stave off the foreclosure process. Inaddition to solving the immediate legal problems, the loan also provided theborrower with approximately $750,000 cash-out proceeds to re-capitalize andrevitalize his business.

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