Lexington Precision

Client

Senior Lender to Lexington Precision Corporation(“Lexington”), the Debtor.

Challenge

Lexington is a $80.0 million annual revenue rubber products company serving the automotive and medical product markets. CapitalSource challenged the Debtors on its requested  use of cash collateral and an extension of exclusivity.   As part of Bridge’s engagement, a Bridge team was asked to prepare an expert report refuting the assertions on which Lexington based its assertion that it was entitled to the use of its secured lender’s cash collateral.  Among other components to this report Bridge was asked to review:  (i) changes in the Debtor’s total enterprise value over certain periods from March 31, 2008 to February 10, 2009, (ii) the current financial condition of the Debtors and (iii) the Debtor’s financial prospects during the next six months.

Solution

Bridge professionals wrote an expert report addressing each of the three major areas of concern.  In developing the solution Bridge employed statistical models, competitive benchmarking and industry research to reach conclusions supporting a limited use of cash collateral and exclusivity based on declining Total Enterprise Value, a deteriorating financial position and a probable declining financial position over the next six months.

Results

A Bridge professional testified as an expert witness defending a fifty page report documenting and supporting the conclusions reached.  The judge ruled in favor of a limited use of cash collateral, greater controls over financial covenants tied to the use of cash collateral and a shortened exclusivity period.