P Trust recovers $30 million on Defaulted Secured Note

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Transactions

“P” Trust recovers $30 million on Defaulted Secured Note

Kerlin served as the financial advisor to the “P” Trust on the negotiation and restructuring of $49 million of secured notes received eight years earlier in conjunction with the sale of an FBO business. The buyer of the FBO was losing a substantial amount of money and was in monetary default on the notes following the post-2008 downturn in private aviation and the “P” Trust was faced with the prospect of having to foreclose on an asset that had less than $10 million in value at the time.

Upon assessing the situation, Kerlin was able to vet the borrower as the most logical operator of the business and to validate the potential for future recovery on the notes under the borrower’s operating and development plan. Through extensive negotiations and creative structuring, Kerlin developed a solution that provided the borrower with forbearance on the notes and a prepayment option that provided a return to the “P” Trust far in excess of the present value of the assets while incentivizing the borrower to execute on its plans in an expedited manner. In exchange, the borrower provided additional collateral, which limited the potential for loss and provided the Trust with multiple avenues for recovery, which did not exist previously.

Ultimately, the borrower was able to execute on its development plans and exercise the prepayment option, returning over $30 million to the “P” Trust and allowing the borrower to avoid a foreclosure, which would have undermined the borrower’s broader business operations.