SERVICES

Distressed Debt

Distressed debt is defined as a valid debt that is recognised by the debtor, be it voluntarily or by a court or arbitration verdict; while at the same time the debtor is unable, or unwilling, to fulfil payment obligations. There are many types of distressed debt. Lighthouse mainly focuses on trade related or financial private sector claims, as well as business-to-government obligations. Both non-insured as well as insured claims can be reviewed by Lighthouse.

 

Benefits:

1) Enhance the Bottom Line

Provided the debts have been written off, the income from the sale proceeds are 100 % profit.

 

2) Clean the balance sheet and improve ratio’s

Old debts that keep appearing on the balance sheet are unwelcome guests for any company.

 

3) Improve liquidity

Instead of having supposed value on paper, direct cash is generated.

 

4) Focus on future

Selling distressed debt means taking a definitive action on debts that may have dragged on for years. Bad debts take non-productive time and effort (ageing, interest calculations, legal work) and are a distraction from productive business. Cleaning up old files helps to focus on future business opportunities.

 

Purpose

To review Creditors non-performing trade related debts with the intent to purchase past due receivables at a reasonable price. Creditor will receive an agreed percentage of the value of the principal amount and possibly, of the accrued interest on the debt. Pay- out percentages will vary greatly depending on the risk assessment of the claim, the debtor and country where debtor is residing. Lighthouse, as debt experts, are in the position to find the highest bidder with the best possible terms.

Lighthouse analyses the legal and economic claim based on the documents provided by the Creditor. If the Lighthouse review process determines that the claim is tradable, Lighthousewill evaluate candidate buyers that might be interested to purchase the debt and the respective terms thereon.

 

Pro Bono

Lighthouse diagnosis includes reading any and all documents relating to the debt, making legal and economic assessments, selecting and approaching candidate buyers, etc. All above is offered Pro Bono. Only upon execution of transactions will Lighthouse be entitled to a fee. The fee will depend on the size of the claim, the complexity of the claim and the quality of the underlying supporting documents.

 

Procedures forDistressed Debt :

1. A mutual Non-Disclosure Agreement is recommended prior to the outset of constructive information exchanges.

2. Lighthouse to receive full and unrestricted access to any and all documentation regarding a specific debt including any digital/electronic communications.

3. If a debt is qualified as tradable, Lighthouse will require a Power of Attorney that:
(a) Confirms Lighthouse position to represent the Creditor as well as the authorization to negotiate terms for the sale of the debt and;
(b) Grants Lighthouse a period of exclusivity with regard to the potential sale of the debt.

4. All proposals to be pre-approved by the Creditor.

5. Duration of the full process on average will take between 6 and 12 months.

 

Other Services

Clearing

Countertrade

Beyond the scope of diagnosis as mentioned under Distressed Debt, Lighthouse possesses in depth experience in the fields of bilateral clearing and countertrade transactions. For more information, please contact Lighthouse at: info@lighthousestructuredfinance.com