Situation:

HSG was selected by a Court appointed Examiner and approved by the Court to assist the Examiner in addressing a number of complex commercial issues arising from a significant offshore energy-related bankruptcy. Creditors had lost confidence in the ownership/management of the firm, and requested the Court appoint a Trustee to replace management. Or, in the alternative, that an Examiner would be selected to evaluate a number of issues, including the reasons the business had failed, and whether management should be replaced.

Analysis:

The examination revealed a variety of issues to be addressed. Such issues included financing, corporate structures, intercompany agreements, payments to owner, sale and buyback transactions among related parties, loans to related parties, going concern and consolidation accounting issues, valuations, solvency, refinery construction and general management issues.

In order to address these diverse areas, the HSG team included a former Director and Senior Credit Officer of one of the world’s largest banks, and the former CFO of a large oil and gas company. As the project moved forward, it added to its team the former managing general partner of a construction/construction management company. Other consultants consisted of the former head of accounting at a major university, a certified fraud examiner and other consultants as necessary to address specific issues.

Working in close contact with and under the direction of the Examiner, the team conducted a detailed analysis of the debtor. It then developed a fact-based story of what happened in the company that resulted in its eventual bankruptcy.

Findings and Conclusions:

The individuals involved on the HSG& Co. team were able to assist the Examiner in thoroughly addressing the charges set out by the Court in the preparation of the Examiner’s report and in preparing the Examiner for testimony. Subsequent to the Examiner submitting his report, the senior creditor made a motion for management to be replaced by a court appointed Trustee. That motion was supported by the U.S. Trustee.