The Organization is a not-for-profit sponsored by NeighborWorks® America (NWA).  The Organization provided educational and consulting services to homeowners and potential homeowners (mortgage advice, home care advice, etc.) in its local community.

The Organization also engaged in real estate rehabilitation, development and rental projects, along with various forms of lending/lending services for lower income individuals and families.

FDP was engaged after overdevelopment and a downturn in the real estate market left the organization with vacant properties (properties for sale and for rent).  The decrease in cash flow led to delinquent bank and vendor payments. The Organization was operating in a severe liquidity crisis.

FDP quickly assembled a preliminary financial forecast to measure the cash shortfall, along with preliminary recommendations for liquidity improvements, primarily principal deferrals, temporary interest rate reductions, and a capital contribution from the sponsor, NWA.

Additionally, FDP guided management in making payroll reductions and more aggressive calls for contributions, which provided additional operating funds for the reorganization process. 

FDP’s operating advice was to downsize the Organization to provide its base consulting services to existing and potential homeowners, and to no longer provide certain capital-intensive services such as real estate rehabilitation and development, rental projects and lending services, as there was inadequate capital to support those efforts.

FDP began the process of negotiating with the various banks involved, and was getting cooperation; however, the sponsor was unable to provide the necessary funds to keep all the Organization’s operations going.

Due to the funding shortfall, the organization had to turn over its real estate to the respective lenders, which the Board completed without the assistance of FDP.

As recommended by FDP, the Organization ultimately reorganized, in the same general geographic area, as an entity providing base educational and consulting services to homeowners and potential homeowners, regardless of income.