Issue
While supporting a global bank’s capital markets group on an equipment-leasing borrower with multiple lending facilities and securitization debt transactions, our CBIZ Credit Risk Advisory Services team recognized the risk of potential double pledging of lease receivables. We proactively initiated a double-pledge test of lease receivables to verify collateral and to determine any potential for double pledging of the lease receivables to the bank.
Solution
We conducted a targeted double-pledge test across the borrower’s transactions and corporate facility, comparing the bank’s collateral records to the company’s monthly service reports and other lending facility-level records. Most deals tested clean. However, at the corporate level, we found that lease receivables had been sold to third parties while the related corporate lending facility remained outstanding with the bank, with double-pledged assets totaling $100 million. We alerted the bank immediately, performed weekly data reviews, and tested weekly servicer reports. Counsel also engaged us to support recovery actions and ongoing monitoring.
Outcome
Early detection allowed the bank to mobilize a workout team, validate reporting, and begin selling identified assets to reduce exposure. While the borrower ultimately entered bankruptcy, our findings and monitoring helped the bank curb further advances and mitigate losses on a multi-billion-dollar corporate lending facility.
| Company Information | |
|---|---|
| Industry | Financial Services |
| Entity Type | Bank |
| Ownership Structure | Public Company |
| Geographic Footprint | International |
| Number of Employees | 97,000 |
| Annual Revenue | $44 Billion |
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