The namesake for a business filing for Chapter 11 bankruptcy protection has quit his own company, while the business attempts to reorganize and reduce its debts, as reported by the Minneapolis Post.
James Dolan left The Dolan Company, headquartered in Minneapolis, when the bankruptcy was announced. The company provides professional services to companies in the legal, financial and real estate industries. The Dolan Co. also owns Politics in Minnesota and the Finance & Commerce newspaper.
Dolan, a protégé of Rupert Murdoch – who is the founder of News Corporation – formed The Dolan Co. in 1992 with Cherry Tree Investments. The company is known to be one of the largest public companies in the state of Minnesota.
The company's mortgage foreclosure processing business is rumored to be to blame for the company's tremendous financial losses.
Along with Dolan stepping down as CEO, the company announced that its chief operating officer, Scott Pollei, has also made the decision to resign. The company stated that the choices made by moth men are "concurrent with the planned chapter 11 filing."
Kevin Nystrom has been appointed as chief restructuring officer. Two other leadership positions, held by Chief Financial Officer Vicki Duncomb and General Counsel Renee Jackson, are not affected by the bankruptcy filing and the two remain at The Dolan Co.
DiscoverReady, LLC, an e-discovery business owned by the company, is not in the chapter 11 filing.
Dolan commented that the company has "agreed to a comprehensive balance-sheet restructuring with its secured lenders that, among other things, will allow the company to continue honoring obligations of its employees, customers, and vendors in the ordinary course of business."
The company also announced that shareholders of both common and preferred shares will not be compensated – and all shares are being cancelled.
The New York Stock Exchange delisted Dolan's stock after the price lowered a full 90 percent over a three-month period. The stock has been moved to an "over-the-counter exchange."
The Dolan Co. will emerge as a private company after the reorganization is complete.
The reorganization will allow the company to cut secured debt obligations by about 70 percent, thereby reducing a debt of approximately $170 million to $50 million.
In the last year leading up to the bankruptcy, Dolan divested some of his business units. He told reporters that selling off the units would allow him to target more to his DiscoverReady business.
Nystrom commented, "This reorganization step is necessary to unlock these current businesses from the weight of debt principally associated with its previous mortgage foreclosure processing businesses. The company and its lenders are committed to the customers, employees, and vendors and want to secure a bright future through this process."
In 2013 Dolan said that due to different arrangements with its credit, the company had to acquire $50 million in cash to pay outstanding loans.
By their third quarter the company reported that they had a net loss of $27.5 million.
Contact a bankruptcy attorney from our directory if you need to file for chapter 11 protection. The sooner you begin to reorganize your debt the sooner you can think about moving forward.