Case Studies
Duane Morris Bankruptcy Strategy Achieves 80 Percent Return for Universal Access Global Holdings Inc.
Duane Morris lawyers lead one of the most remarkable turnarounds of 2006
When approached carefully, chapter 11 provides a special opportunity to increase a business's enterprise value.
Universal Access Global Holdings Inc., a publicly traded Internet reseller, sought Duane Morris' help after changing industry configurations caused extensive financial losses. In concert with Universal Access' management and financial advisors, Duane Morris developed a strategy to rehabilitate operations under the protection of chapter 11 and then sell the company's assets. The Duane Morris team filed a chapter 11 case on behalf of Universal Access in federal bankruptcy court in Chicago. Over the next year, Duane Morris and turnaround management specialists Buccino & Associates examined Universal Access' operations and renegotiated supply contracts, sold unneeded assets and rejected burdensome contracts. Through these rehabilitation efforts, Universal Access returned to operating profitability.
In the next step of the chapter 11 strategy, Duane Morris conducted an auction to sell Universal Access as a going concern under the auspices of the chapter 11 case. At the time of filing, it was estimated that less than $4 million would be available for creditors absent rehabilitation in chapter 11. At the auction, Universal Access was sold for more than $22 million. With other asset dispositions taken into account, the company's value increased at least sixfold from its estimated liquidation value when the case was filed. Duane Morris helped to confer that value on legitimate creditors by fending off millions of dollars in invalid creditor claims.
As a result of the carefully executed bankruptcy strategy, Duane Morris confirmed a chapter 11 plan for Universal Access, which, with the assistance of plan administrator The Clear Thinking Group LLC, returned over 80 cents in cash on the dollar for valid claims of general creditors. In stark contrast, the average general creditor recovery in bankruptcy is less than 10 cents on the dollar.
"The entire Duane Morris team brought to the Universal Access case that wonderful combination that you find all too rarely - comprehensive knowledge of the law and business acuity. It is no exaggeration to say that, without the efforts of the Duane Morris team, the results achieved in the UA case would have been decidedly less favorable and gaining them certainly more arduous."
- Randy Lay, President, CEO and Director, Universal Access Global Holdings Inc.
