Chevy 73 and M&T Bank

Division: Phoenix Management Services


Client

M&T Bank, the “Bank” retained Phoenix Management Services to work with its borrower, Chevy 73, Inc. Chevy 73 was consistently a top-3 market share leader among Chevrolet auto-dealers in the Mid-Atlantic region with premises located in Berlin, New Jersey.

Problem

M&T Bank uncovered a $7 million out-of-trust (under collateralization) position on its $26 million Floorplan Credit Facility to the Company. It was alleged that the Company had committed fraudulent activities in selling vehicles “out of trust” whereby the vehicles were sold and paid for, with the proceeds being retained by the Company and not paying off the Floorplan loan against the sold vehicle

The Bank continued to have $19 million of Floorplan loans collateralized by new and used car collateral. Given the alleged fraudulent activity coupled with the limited/inconsistent nature of the Company’s reporting, the Bank requested that Phoenix assume control of the collateral and overall Company operations. Phoenix supervised the activities at the Company for the next 90 to 120 days so that an effective sale process of the Company’s assets could be achieved.

Solution

In assuming the interim management role in operating the Company, Phoenix created a variety of detailed financial tools, coupled with supporting analysis and operating controls to allow for a value maximization of the Company’s assets during the sale process. Ultimately, Phoenix provided oversight to the liquidation in excess of 100 cars including both one-off car sales and separately packaged car sales resulting in a recovery far in excess what had been anticipated by both the Bank and the Company ownership.