Insight and Intelligence on the London & International Insurance Markets 24 Apr 2018
PatNat plans bankruptcy filing in sale to lenders
- 28 November 2017
Patriot National, the insurance services outsourcer majority owned by former CEO Steven Mariano, plans to seek Chapter 11 bankruptcy protection as part of a deal to be acquired by its secured lenders.
Under a reorganisation plan outlined today in a regulatory filing, all issued and outstanding equity interests in the company would be erased.
The plan would leave a lending unit of New York-based Cerberus Capital Management and another credit provider, TCW Asset Management, in control of PatNat.
The plan envisions PatNat operations continuing during the reorganisation. Shares in the company have not traded on the New York Stock Exchange since 22 November, when it said it could default on its lending agreements and had fired a third of its staff.
The shares plunged 66 percent to $0.36 after that notice was posted with the Securities and Exchange Commission. The Fort Lauderdale, Florida-based company attributed its predicament to the receivership of Guarantee Insurance, which had provided more than half of its business.
Guarantee is majority owned by Mariano and had agreed to maintain a certain level of business with PatNat in exchange for a $30mn transfer from the company to Guarantee.
Under the reorganisation plan, PatNat equity holders would get nothing. Also, any inter-company claims would be cancelled.
Mariano held over 12 million PatNat shares as of January, but by May of this year the total had fallen to about 7.2 million, according to Nasdaq data.
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