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Banking & Finance

Savannah’s Title Max Bankruptcy Moves Through Courts

Category: Banking & Finance

Lawyers Ask for Millions in Compensation

SBJ Staff Report

Aug. 9, 2010 – Creditors of bankrupt Title Max received notices last week from the U.S. Bankruptcy Court that lawyers and financial analysts are seeking millions in pay for the workout and legal representation of the firm owned by Savannah resident Tracy Young. The multi-million dollar conglomerate is closely-held, and is one of Savannah’s largest corporations headquartered in Chatham County.

Thomas Califano and Jeremy Johnson, partners in the New York firm of DLA Piper, and Marvin Fentress, partner with Savannah law firm Gray & Pannell, are representing TitleMax Holdings, LLC. in the Chapter 11 case in U.S. Bankruptcy Court for the Southern District of Georgia.

The company’s business model is that it holds customers’ vehicle titles and makes cash loans, promoted with a heavy TV ad schedule in most of its markets. It has operations is Georgia, South Carolina, Tennessee, Mississippi, Missouri, Virginia and Illinois, headquartered from Savannah.

The company originally filed for bankruptcy protection in April 2009, and won court approval of a reorganization plan this past April that will allow it to exit bankruptcy, however financing had not been secured as of April 2010.

In the plan approved, the founder and CEO Tracy Young of Savannah, will retain 100 percent ownership and all the creditors will be paid in full, Califano told the Court.

The company reported $ 301 million in assets and $183 million in liabilities in its April 2010 disclosure statement.

Bloomberg News reported that the company “projects pretax income of $116 million this year on revenue of $306 million, and pretax income of $157 million on $348 million in revenue in 201l,” as of April 2010.

At the time the company filed Chapter 11 in April 2009, it had 550 locations in seven states, but had to file due to the company’s inability to refinance its debt of more than $200 million.

The bankruptcy was triggered by the maturing of a $165 million loan from Merrill Lynch & Company which was acquired by Bank of America Corp. in January 2009 and was the biggest creditor in the case. However, a long list of creditors, primarily in the South, are listed on bankruptcy documents.

In June, TitleMax Holdings LLC, sold $250 million of five-year, 13.25 percent senior secured notes at a yield of 13.5%, it was reported by Bloomberg News, successfully raising the cash to conclude the bankruptcy. But the legal bills are still being negotiated before the bankruptcy can be concluded.

There are actually 15 different corporations including an affiliate called Checkmax; all filed for bankruptcy protection.

“Titlemax did not file for bankruptcy relief due to operational or financial performance,” Titlemax Chief Executive Officer Tracy Young told Bloomberg News in April 2009. “In 2008, Titlemax generated by far the highest revenues and profits in its history and 2009 is expected to be another record year,” he added.

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    • Guest - Judy

      Edenton, NC, USA

      How Tracy Young was allowed to file for bankruptcy or chapter 11 is amazing. Title Max should be charged with criminal intent to extort persons borrowing from them. The mark up of a 181.16% interest on a $700.00 loan with a return of $1,586. is extortion. They need to be reinvestigated.

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