• Engagement began in March 2007, after overdevelopment and a downturn in the real estate market left the organization with vacant properties (both properties for sale and for rent). The resulting decreased cash flow led to delinquent bank and vendor payments. The organization was operating in a severe liquidity crisis.
• FDP quickly assembled a preliminary financial forecast to measure the cash shortfall, along with preliminary recommendations for liquidity improvements, primarily principal deferrals, temporary interest rate reductions, and a capital contribution from the sponsor, NWA.
• Additionally, FDP guided management in making payroll reductions and more aggressive calls for contributions, which provided additional operating funds for the reorganization process.
• FDP’s operating advice was to downsize the organization to provide its base consulting services to existing and potential homeowners and to stop providing certain capital intensive services such as real estate rehabilitation and development, rental projects and lending services, as it didn’t have adequate capital to support those efforts.
• FDP began the process of negotiating with the various banks, and was getting cooperation; however, the sponsor was unable to provide the necessary funds to keep all of the organization’s operations going.
• It became apparent that the organization would have to turn over the real estate to the respective lenders, which the Board executed without the assistance of FDP.