case study
GBPC
Overview
Milberg Coleman Bryson Phillips Grossman PLLC (“Milberg” or “Company”) is one of the largest mass torts firms globally, having been around for over 50 years and recovered over $50 billion for clients.
Milberg has proven to have the size, resources, experience, and blended cost efficiencies to have become one of the world’s leading complex litigation firms, representing plaintiffs in mass torts and class actions involving antitrust, securities fraud, fraud on market, financial fraud, consumer fraud, automobile emissions, data breach, defective drug and devices, construction claims and catastrophic environmental disasters, as well as climate change. Because of ACI’s unique relationship with Milberg Coleman Bryson Phillips Grossman PLLC, we had the opportunity to participate in a unique and very attractive international mass tort deal as the law firm expands into the EU. ACI provided $15 million in debt funding to the partners to acquire additional cases and law firm acquisitions. The loan facility was personally guaranteed by the 80%+ owners, of Milberg. These partners, any whom of which had enough personal net worth to repay the note many times over, gave ACI a high level of comfort with not only the potential success of this investment, but also the long-term value of the Company.
Thesis
The opportunity was to finance the purchasing of these cases by Milberg and then share in ACI looks for asset classes and opportunities which are truly uncorrelated with the broader markets, making this investment highly compelling. Working closely with the majority partners of Milberg, one of the largest and most successful mass tort firms globally, gave ACI both valuable investments insights and sourcing capabilities for a highly sought after tort opportunity. Milberg and its partner have global reach and multiple business lines including Consumer Products, Antitrust & Competition Law, Securities Litigation, Finance, and Insurance Litigation, Environmental and Toxic Torts Litigation, and others. Financing a small business line of a massive multi-national law firm, with a strong collateral and avenues of recourse created an optimal risk reward balance for ACI.
Structure
20% annualized interest (paid monthly) as an interest only for the first 18 months and then the payback of both principal and interest for the last 18.
The Note is personally guaranteed by the majority owners cited above.
Return Profile
The return profile over the 36 month life of the instrument is depicted here.
As the instrument pays monthly at 20%, we will receive $6.986MM in interest over its life. Paying only interest for the first 18 months gives financial flexibility to the partners at the outset.
The Edge
Our relationship with Milberg again provided an opportunity to put capital to work with a top-tier law firm, well-respected owners/partners, and a mass tort case we were already quite familiar with.
When we entered this investment, the world was just getting over COVID and high yields with personal guarantees were few and far between if existing at all.