The Mirus Special Situations Group
Envisionet Computer Services, Inc.
Envisionet was a technical service call center operation that grew rapidly during the dot-com boom to become the largest technology employer in the state of Maine, with over 2,000 employees in 2001. In order to finance growth, the company completed six rounds of equity investments and borrowed heavily to support the build out of five call centers around the state.
By early 2001, the company had become overly dependent one large customer (Customer “M”), which represented more than 50% of the company's revenue. When Customer M became aware of the company's revenue concentration, it immediately took steps to reduce its exposure to a possible failure of Envisionet. This move by Customer M, coupled with a bankruptcy filing by another customer, precipitated a cash flow crisis for the company.
The board of directors decided to pursue a sale of the business, and consulted with the Mirus Special Situations Group. Mirus provided the board with an analysis that highlighted two critical concerns: (1) the company was fundamentally insolvent and did not have sufficient cash flows from operations to meet the company's near-term or long-term obligations to creditors; and (2) the company's enterprise value, following the recent customer losses, was less than the aggregate value of its liabilities. As a consequence, Mirus recommended that the company immediately file for bankruptcy, obtain debtor-in-possession financing, and begin a process to sell the assets for the benefit of creditors. The company filed for relief under Chapter 11 on June 14, 2001. By the time the Mirus Special Situations Group was retained in early July, the company had enough cash for just one additional payroll cycle. As a consequence, the prospective DIP financing was in jeapordy, and the equity investors were demanding that 10% of the DIP financing package be provided by a stalking horse bidder. By July 18th Mirus had solicited over one hundred prospective buyers and had received preliminary offers from five of them, of which two had agreed to participate in the debtor's DIP financing package.
After nominating a stalking horse bidder and completing the DIP financing, Mirus worked with the debtor's counsel to prepare bid procedures as well as a motion to sell assets. The DIP was only sufficient for 60 days of operations at the current burn rate. A sale hearing was scheduled for the end of August, Mirus managed a competitive auction, and the transaction was completed – all within just 60 days of Mirus' initial engagement with the debtor.
- John Donnelly, CEO of Envisionet
- George Marcus, Debtor's Counsel, (Marcus Clegg & Mistretta)
- Robert Keach, Counsel to the Official Committee of Unsecured Creditors, (Bernstein Shur Sawyer & Nelson)
- Michael Lugli, Work-Out Officer for KeyBank