It is increasingly difficult, time consuming and expensive to identify, analyze and evaluate distressed investments.
Managing distressed investments and their potential legal remedies
requires significant skills and expenditure of time and money.
Application in the Market
◆ Non-performing loans (syndicated or otherwise) and other debt instruments in which the value of the underlying collateral turns out to be far less than what was represented by the borrower, agent bank, appraisers, or other professionals. Especially applicable to asset backed loans (ABL) and collateralized loans (CLOs)
◆ Investments (equity, convertible notes, etc.) where the company or its fiduciaries misrepresent the company’s performance, its assets and liabilities, etc. in connection with the investment. We can also investigate and pursue claims where the company breaches its contractual obligations (e.g., in the case of convertible notes) or where the company’s management breach the fiduciary duties they owe to the company and its shareholders. Especially applicable for private equity and venture capital investments.
◆ FARA can evaluate your distressed investments to discover those that have potential hidden value.
◆ FARA has analysts, claim managers and legal advisors who will evaluate and pursue potential recoveries
◆ FARA can provide the financial and business management expertise required to efficiently form and manage Special Purpose Vehicles (SPV) to manage and monetize distressed, written off and underperforming assets.
◆ FARA will only be compensated if a successful recovery is made.
◆ Not all SPVs are alike and FARA can also help evaluate the best SPV structure to utilize.
◆ FARA can use a litigation trust as an SPV for anonymity. Due to business concerns or not wishing to pursue some recoveries in their own name, Institutional Investors may choose to utilize a litigation trust. A litigation trust will allow remedies to be pursued on the investor’s behalf with the investor retaining an interest in the recoveries.
◆ The investor would not be a named party as the trustee of a litigation trust is the proper party to bring claims relating to a trust.
◆ The investor would be required to provide all documentation and key witnesses who were involved in the underlying transactions.
◆ The structure insulates the investor.