Case Study

The following case studies represent UnitedAMS’ Team’s cumulative experience with complex assets, businesses and circumstances. These studies were taken from different types of cases, including but not limited to, Receiverships, Bankruptcy and Business Consulting/Asset Management. Furthermore, these case studies will demonstrate UnitedAMS’ ability to work with difficult assets, debtors and businesses, as well as maximize creditor’s recovery.

Asset Name: Emerald Suites South and Emerald Suites Cameron
Asset Type: Hotel/Flexible Stay
Asset Size: 492 units (Two locations)
Creditor: Bank of America
Credit Amount: About $30 million for both assets

Dotan Y. Melech of UnitedAMS was appointed as Receiver on January 26, 2011. Upon appointment, the Receiver analyzed the guarantor’s historical financials in order to determine inefficiencies, as well as establish a revenue baseline. Upon takeover, both assets were performing at less than 65% occupancy (Avg.), with more than 65 employees and a negative monthly cash flow. Within 90 days from appointment, the Receiver reduced operating overhead by more than 50% (less than 30 employees), increased revenues (actual and projected) by more than 50% (from $35/night to over $50/night), and turned an under performing asset into a business with positive cash flow. Furthermore, as per the reported financials provided by the guarantor, the assets showed over $2.5 million loss in 2010, however, per the Receiver’s pro-forma, once stabilized, the assets’ NOI for 2011 exceeded $2.5 million (a swing of over $5 million). On May 15, 2011, the Receiver successfully facilitated the sale of the Emerald Suites Cameron asset (96 units), at the trustee sale auction for over $3 million in cash, and turned over the Emerald Suites South (396 units) asset to Bank of America’s OREO West division on July 15, 2011. The larger of the two assets was turned over to the lender with an approx. 75% average occupancy rate and over $120K in monthly net cash flow. Per Bank of America’s OREO West Senior Asset Manager, the larger property was operating at approx. 80% occupancy with an estimated yearly NOI of over $1.8 million. Furthermore, at the end of the Receivership period, the Receiver wired to Bank of America SAG, the remaining “recovery” funds in the amount exceeding $600K for both assets after all property expenses were paid. In summary, this case study demonstrates UnitedAMS’ ability to handle large, difficult, negative cash flow assets and their ability to implement creative and efficient strategies with a hands-on approach, and in a very short period of time, turn them into profitable businesses, which consequently increases the debt recovery for the lender. The total actual recovery for both assets exceeded $22 million (73%) post Receivership, whereas pre-Receivership, the recovery was estimated (after charge-off) at less than $14 million (47%).

 


 

Asset Name: Campaige Place
Asset Type: Low Income Apartment Complex – Tax Credit Property
Asset Size: Total of 319 units
Creditor: Citibank
Credit Amount: About $8 million

Dotan Y. Melech of UnitedAMS was appointed Receiver on 2.12.10. This property consisted of 319 low-income units and was operating at a mid to high occupancy rate and a very high turnover rate at takeover. The Receiver and his team at UnitedAMS analyzed the financial records, onsite operations, assessed tax credit compliance requirements, and developed a plan within 60-days from takeover, to stabilize the asset. As indicated, the property was required, per the loan documents, to meet very high standards of tax credit compliance. The Receiver overcame these challenges and alleviated the liability associated with this by preparing the property for the May 2010 Department of Business and Industry ‘Housing Division’ audit, which was passed due to the extensive work and preparation of the Receiver’s team in files auditing and facilitating and preparing for, property inspections. Security, cash management and front desk operations were a tremendous challenge and presented numerous issues for the property. Consequently, the Receiver implemented a security and interdiction plan for the property, as well as staffing the front desk with qualified personnel. Additionally, the Receiver put in place and oversaw a detailed cash management procedure, installed/repaired the onsite surveillance equipment, and utilized Brinks Armored Car cash pickup services for cash pickup and deposit; therefore, revenues and overall financial performance improved notably. The property was stabilized and was brought up to good repair and condition during the receivership, despite the difficulties that needed to be overcome due to the type of tenants at the property. At takeover the approximate occupancy of the property was 92%; however, due to the high rate of non-paying tenants the Receiver evicted during receivership, the occupancy at the end of the receivership period was 82%, although revenue increased and was maintained thru June 2010. In June 2010 the property was foreclosed on by Citibank and UnitedAMS, due to its extensive Asset Management experience and overall performance during the Receivership period, was contracted by Citibank to continue on as Asset Manager until April 2011 when the property was sold to a third party for $4.7 million, introducing a 59% recovery for the Lender, which considering the risk and liability levels with this type of asset/loan, exceeded the lender’s expectations.

 


 

Asset Name: Executive Park
Asset Type: Executive Business Park (Office Complex consisted of 11 buildings)
Asset Size: Approximately 60,000 SF
Creditor: US Bank
Loan Amount: About $6.5 million

Dotan Y. Melech of UnitedAMS was appointed Receiver on 5.10.11. The property was an 11-building office park that was in fair condition at takeover. Upon appointment, the property was at an approximately 55% occupancy, which was maintained during the receivership without further loss of tenants (although several tenants requested lower rates during the course of the receivership). The Receiver had to overcome complications imposed by the Probate Court (due to the borrower’s passing prior to the receivership appointment) in the case, and coordinate the takeover as well as the liquidation of estate assets, security deposits dispute, and other miscellaneous liabilities created by the borrower and administered by the probate Trustee. Additionally, the Receiver negotiated a settlement with the Trustee related to the security deposit liability, and consequently, reduced the asset/lender’s liability. The borrower had organized an HOA for the asset, which was taken over by the Receiver and later transferred to the new owner. Including the many obstacles that were presented during Receivership, the estate suffered vandalism and theft on the property. The Receiver implemented a cost effective plan to secure all the individual buildings from encountering the same damage, ultimately saving the estate from further economical loss. During the course of the receivership, the estate was maintained and the Receiver was able to operate the property without shortfall in operating funds. Furthermore, the Receiver was able to make cash distributions to the lender post receivership. The property was foreclosed on 11.23.11 and US Bank requested that the Receiver stay on under the capacity of Asset Manager and a separate agreement was entered into with the bank. UnitedAMS was an integral part in facilitating the sale of the property by assisting the bank and the listing broker and coordinating the sale that took place on 6.20.12. The asset sold for $3 million providing an estimated 45% recovery to the lender post foreclosure. UnitedAMS’ Team worked tirelessly with the buyer to facilitate the due diligence and the transfer of title, and was an important contributor to the overall success of this asset.

 


 

Asset Name: AAA Quality Storage
Asset Type: Self-Storage Facility
Asset Size: 384 storage units
Lender: Town & Country Bank
Loan Amount: About $3.5 million

Dotan Y. Melech of UnitedAMS was appointed Receiver on 9.17.12. The asset consisted of 384 self-storage units and was owned/managed by an out of state (absentee) operator. Upon takeover, the Receiver interviewed the onsite staff and, on a case-by-case basis, hired the qualified onsite management team as independent consultants. By doing so, the Receiver was able to maintain continuity of the positive trends, while evaluating and developing strategies to address any and all deficiencies in operations. A deferred maintenance plan was established and implemented shortly after takeover, although needed repairs were minimal. Furthermore, a detailed accounting tracking system and cash handling procedures were put in place, and the Receiver, in a very short period of time, generated a comprehensive report, which was distributed to all parties, regarding the asset financial performance, budget and operations. The Receiver’s due-diligence, information gathering and reporting allowed the lender to determine its liabilities, strategies, and foreclosure schedule. During receivership the occupancy was maintained, the property cash flowed and the Receiver was able to operate the property without shortfall in operating funds. Consequently, approximately 90-days from takeover, on 12.27.12, the lender foreclosed on the asset and is currently holding it as an REO, with the objective to potentially increase its recovery due to improved market conditions, replacement cost deferential, decreasing supply and increasing demand for this product type. Upon foreclosure, the Receiver facilitated a smooth transfer of assets, data, and management duties to the lender and their assignee.

UnitedAMS’ Team of professionals’ experience and expertise goes beyond Rents & Profits Receiverships. The case studies listed below demonstrate our Team’s ability to administer cases involving businesses, dispute resolution, asset liquidation (other than real estate), agriculture and general business consulting.

 


 

Case Name: Pena vs. Garcia
Type: Dispute, Business/Retail/Distribution Receivership
Creditor: Private Party

Dotan Y. Melech of UnitedAMS was appointed Receiver on 4.12.12. In his case a creditor (Plaintiff) was attempting to collect debt (judgment) from the debtor (Defendant) and was successful in obtaining a court order to appoint a Receiver on the operating business, which was an auto mechanic shop and car accessories retail store. Upon appointment, the Receiver developed management and security plans to manage the ongoing business and took over the operations. This complex business operation involved a substantial amount of cash transactions, as well as unique vendor relations for the supply of second-hand, refurbished products. Shortly after takeover, the Receiver determined, and recommended, that the cash flow from operations was insufficient, that it was a diminishing return to operate the business and that the best route was the liquidation of all business assets. The Receiver successfully liquidated the assets and closed the business operations in order to minimize future liabilities to the estate.

 


 

Case Name: Augusta Edward Borges
Type: Agriculture, Storage
Creditor: F&M Bank
Credit Amount: About $5 million

Dotan Y. Melech of UnitedAMS was appointed Receiver on 1.4.13. This asset consists of approximately 25 acres divided to three parts: farmland, vacant/parking (rough), and a 10,000 SF storage building. Upon appointment, the Receiver secured the assets and requested any and all agreements/contracts with current tenants/subcontractors from the Defendant and the tenants. Shortly after takeover, the Receiver obtained a customized insurance policy (covering all aspects of the asset, including an onsite well), and commenced negotiation to lease the vacant buildings. Furthermore, the Receiver continues to manage the existing tenants, farming and parking to a state contractor, and caters to their needs. The Receiver continues to evaluate options and strategies to maximize revenues, as well as work with local authorities the find the highest and best use of the asset.

 


Asset Name: DMA Financial
Type: Online Lending Company
Asset Size: $45 Million
Creditor: Private Investors
Credit Amount: N/A

Dotan Y. Melech of UnitedAMS was appointed as Receiver on June 03, 2016. Upon appointment, the Receiver analyzed the company’s historical documents in order to determine the allocation of assets owned or sold by the defendant. Upon takeover the Receiver initiated asset searches in all states to find any unknown companies, accounts, or assets in the name of the main defendant. After diligent searching and the location of various assets, The Receiver subpoenaed banks, merchant accounts, and vendors all affiliated with the defendant and DMA Financial in order to gather accurate historical information on all accounts. The Receiver later hired a third party forensic accountant to use gathered information to locate missing funds invested into DMA Financial. Next, the Receiver mailed out letters to known investors and created postings in the Las Vegas Review Journal for all unknown creditors to submit their proof of claims. After Receiving all claims and compiling total credit amounts, The Receiver hosted a meeting of creditors to inform all creditors of DMA financial and affiliated companies of the current situation. The forensic accountants were unable to locate any missing funds, potentially resulting in a low recovery. The Receiver created the idea of White Knight Financial, a new online loan company monitored by The Receiver that would repay creditors over time in dividends based off their principal claim amount. White Knight Financial has been approved by the court and is in its final steps before launching. Later, the Receiver sold various pieces of land owned in the defendant’s name in order to recover some value to the estate. The DMA building located on 2920 N Green Valley Parkway and land found in Parowan, Utah was approved for sale and sold for [INSERT VALUE HERE]. The Receiver is now currently focusing on White Knight Financial with high expectations to recover assets for creditors.

 


Asset Name: The Gun Store
Type: Sporting Facility
Asset Size: $3 Million
Creditor: Bank of America [1st lean], multiple
Credit Amount: App. $2.2 Million [1st lean]

Dotan Y. Melech of UnitedAMS was appointed as Receiver on January 11, 2017. Upon appointment, the company was not profitable and Bank of America was looking to simply liquidate assets and close the company. After being appointed, the Receiver promptly looked over past financial documents, took a personal inventory of the store, and created their own budget for the company to operate on. In the budget, the Receiver made multiple changes that drastically affected operations at The Gun Store. First, the Receiver reduced fixed costs by stopping operations in one of the two buildings and putting it up for sale. Following this property downsize, the Receiver reduced payroll expenses for the company. Next the Receiver started charging for services that were missed opportunities during previous operations, such as conceal carry permits and training classes. Following these changes, The Gun Store quickly showed positive signs of life and was no longer operating in the red. Since then, multiple offers have been received about the potential purchase of the gun store. The Receiver is still continuing efforts to improve the company and make it as efficient as possible until the purchase or closing of the estate. It is through the professional experience of the Receiver and his team that The Gun Store will be able to help customers with their firearm needs for the foreseeable future.

 


Arbor Company – Post Judgment Receivership. Dotan Y. Melech was appointed Receiver to collect on an approximately $1.5M (plus interest) judgment obtained by Plaintiff. This case involved the valuation and liquidation of real estate, ongoing patents infringement litigation, and personal property. The estate was funded by issuing Receiver’s Certificates funded by the Plaintiff. After nearly 12 months, the Receiver had successful collected, and distributed, 100% of the judgment amount (including accrued interest), and repaid the Receiver’s Certificate in fueled including interest.

White Knight Financial, LLC (dba wklending.com) – WK Lending is an online lender for consumer loans. It offers one product – Installment Loans. White Knight Financial, LLC was founded on the principals of superior customer service and technology. The management team has over 20 years experience in the installment loans business. Its unique underwriting system can approve loan applications in minutes simplifying the loan process for the consumer. With a streamlined approval process and experienced loan specialists, WK Lending can focus its full attention and resources to leading the industry and be the leading online installment loan lender. Dotan Y. Melech is a co-founder and a Managing Partner of White Knight Financial, LLC.

Case Name: Global Commodities
Type: Export Import (commodities) Business Consulting
Creditor: Bank of America
Credit Amount: Revolving LOC – About $10 million

Dotan Y. Melech of UnitedAMS was selected as Observing Consultant (“OC”) for this asset/company on 3.14.13. The OC and UnitedAMS Team are responsible for observing, monitoring, and tracking the collateral as defined in the Loan Documents, maintain access at all times to the Company’s books and records, submit periodic reports to the Lender, and provide reporting and consulting services, and recommendations. Two weeks from appointment, UnitedAMS’ team a completed a physical inspection of the company, review and analysis of its records, and submitted a comprehensive initial assessment report addressing the main issues with the company’s operational and financial behavior. This report included detailed recommendations of how to remedy most of these issues in the short, mid and long term. This is an ongoing case.

 


 

Case Name: Multiple Commercial Assets (Portfolio)
Type: Industrial/Commercial – Asset Management
Creditor: EverBank
Credit Amount: Approx. $2 million

UnitedAMS was selected as Asset Manager for this portfolio of two properties by EverBank, an east coast based bank headquartered in northern Florida. These assets consisted of four retails parcels, two of which are occupied, one by a banquet hall tenant, and the other by a jewelry store, both long time tenants, with the remaining two parcels being comprised of one large, two story, vacant retail space that currently houses items left behind by the previous tenant, who left before the Asset Manager was appointed. The second asset was a large (box) tilt-up industrial building previously used as a millwork shop, which has already been successfully sold. These assets required regular security checks on a weekly basis in order to avoid vandalism, and ensure that no one is loitering on or near the parcels.

Throughout the management period the Asset Manager continues to persistently pursue collections on the four parcel, retail asset, however, the asset has been able to operate without shortfall for the entire Asset Management period and the bank has even received excess funds periodically. The Asset Manager has been working closely with a local broker to market this asset for sale, which broker was handpicked by utilizing the Asset Manager’s selection and qualification process. Both are working tirelessly on overcoming the lack of interest in an asset of these type. This is an ongoing project.

 


 

Case Name: Modesto C-Store and Gas Station
Type: Asset Management
Creditor: Private Fund
Credit Amount: Approx. $1.5 million

UnitedAMS was selected by a private fund as an Asset Manager for a Shell C-Store and Gas Station in Modesto, California. The fund was looking for ways and strategies to dispose of the asset within 6 months. As a result, UnitedAMS was contacted to recommend a business plan to expedite the disposition of its collateral. UnitedAMS recommended to the fund manager a three phases process: 1. Stabilize operation (short term); 2. Sell business and enter a NNN lease; and 3. Sell the property. Consequently, UnitedAMS was selected to manage this asset and implement this business plan. This is an ongoing case.