As expected, specialty medical equipment finance company DVI Inc. filed for Chapter 11 bankruptcy protection after market close Wednesday. DVI also placed its CFO Steven Garfinkel on administrative leave. Anthony Turek and John Boyle will assume Garfinkel's responsibilities.
There is no word just yet on how this impact's DVI's $1.8 billion of ABS, or whether trustee and backup servicer U.S. Bank will now step in as the primary servicer.
"Despite extensive discussion with potential funding sources, DVI was unable to arrange for the funding required to continue operations," the company said in its release. "Its attempts to address its problems through a sale or recapitalization have been hindered by the recent discovery of apparent improprieties in its prior dealings with lenders involving misrepresentations as to the amount and nature of collateral pledged to lenders."
Prior to joining DVI in 1993, CEO Michael O'Hanlon held a similar position at Concord Leasing Inc., which experienced similar erroneous valuations of its shipping assets. After acquiring Concord, HSBC laid off O'Hanlon in September 1992 after discovering inaccuracies and pledging $175 million to the subsidiary. HSBC subsequently transferred Concord to its Marine Midland subsidiary and took numerous writedowns. According to press reports, Concord did not report a profit from 1991 through 1995.