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Unconventional Partnership Solutions in Challenging Times

Jun 06, 2018

 This article first appeared in The Secured Lender

By Hilco Receivables CEO Jay Stone 

Sometimes the best deals are achieved through taking the road less traveled. The topic of this issue is the role partnerships play in commercial finance deals. At Hilco Receivables we believe in revolution through evolution. We encourage our industry peers to seek uncommon solutions to common problems. It is always our intent to take the stumbling blocks of deals past and turn them into winning solutions.

Let me explain.

In September 2013, Hilco Receivables was approached by a large institutional investment bank to partner with Cenveo (a large national printing company) in helping Cenveo purchase the assets of National Envelope. National Envelope had initiated a sale process under Chapter 11. Hilco Receivables was approached because of our keen understanding of accounts receivable, and Cenveo needed additional financing to close the deal.

We did our research and internally discussed deal structure and pricing. In pricing the portfolio, we utilized results on similar deals as well as we considered the disruption to the portfolio and collectability after a sale, recognizing that the sale to Cenveo was a going- concern sale. We creatively structured the deal so that Cenveo had liquidity to close, Hilco was secure in buying the assets, and the customer relations (a major consideration of Cenveo in its purchase) were preserved.

Ultimately, Hilco Receivables partnered with Cenveo and bought the operating receivables of National Envelope at a price in the high eight figures. We helped save hundreds of jobs and created a winning partnership.

Why was this a notable deal? Hilco Receivables is not seen as a lender – per se. We had to get creative. It’s difficult for banks to lend against fractured portfolios in bankruptcy. A typical asset-based lender won’t normally do that, and, if they do, it is at a greatly reduced advance rate and with full recourse.

Why does this matter today?

A volatile marketplace is leading us on a rocky road. As we travel through the current political climate with new tariffs, rising interest rates and stock market instability, it will become increasingly more difficult to close deals.

We are fortunate at Hilco Receivables to have state-of-the-art analytics and the ability to see the deal from the perspective of all parties involved. We will continue the revolution through evolution and encourage all of you to do the same.

Serving as CEO of Hilco Receivables LLC, Jay Stone is recognized as one of the foremost experts in the Accounts Receivable industry. For over twenty years Stone has developed an in-depth knowledge of A/R management Analysis and Risk Assessment, Portfolio Purchasing and Liquidation, B2B Debt Collection, Debt Purchase, Call Center Operations, International Debt Recovery, and more. Stone’s visionary leadership, operational experience and analytical expertise have resulted in exceptional performance for his customers over the years. In his current told as CEO of Hilco Receivables, Stone is responsible for overseeing all business functions required to manage principal investments totaling over $500 million, $10 billion in assets acquired and over $400 million of purchased and fee-based commercial receivables.