Negotiating a Better Solution
A leading over-the-counter pharmaceutical manufacturer had IRS and New Jersey tax liens totaling almost $200,000. In addition, an SBA lender had a blanket lien on all company assets. On the positive side, the company had strong accounts receivable with leading retail pharmacy chains and a strong distributor. However, the SBA lender had refused to release its lien on the accounts receivable in earlier negotiations with other factors.
We provided initial funding that enabled the company to pay off its IRS and New Jersey obligations. We then negotiated a pay-down of $275,000 in exchange for the SBA lender's release of its lien on the company's accounts receivables. We were able to secure the release by making an attractive offer that combined a pay-down of the term debt with the execution of a tri-party agreement encompassing Versant, the SBA lender and our client. This agreement obligated Versant to make the payment to the lender out of monies otherwise due to the client if our client were late making a payment. With the release of the lien, the company was able to resume its formerly strong growth.