Hire Right

I just got my large envelope about the HireRight bankruptcy 2 days ago. Anyone figure if this large suit is going to put them out of business?

I asked for my free copy of my DAC about 3 years ago and I guess those of us that did are on the mailing list for the bankruptcy filing.

 

If hire right does tank...I wonder if the information will be preserved and somewhat easily accessible?

 

Debt maturities may blow the whistle on Altegrity

by Lisa Allen | Published January 30, 2014 at 2:08 PM
Altegrity Inc., the private equity-owned background check company that vetted National Security Agency whistle-blower Edward Snowden before his rise to international prominence,
faces a 2015 debt maturity wall so steep that sources predict fates ranging from a recapitalization to a bankruptcy filing.
Altegrity's debt is trading at a discount, but the Department of Justice's fraud allegations against an Altegrity subsidiary have put a damper on some debt investors' enthusiasm.
"You could really get your balls blown off in this thing," one distressed hedge fund manager said. "We love risk, but these risks are too undefinable."
The fund manager, who requested anonymity, is concerned that the federal government may impose highly punitive monetary damages on Falls Church, Va.-based Altegrity or otherwise impede its ability to do business.
In a complaint filed on Jan. 22 in the U.S. District Court for the Middle District of Alabama, Northern Division, in Montgomery, the DOJ suggested penalties of $5,500 to $11,000 per violation of the firm's quality review protocol for 665,000 cases, or about 40% of the cases Altegrity subsidiary, US Investigations Services Inc., has handled.
On the low end of that spectrum, the damages could reach $3.7 billion. However, the fund manager noted that Altegrity could seek to settle the case for a much lower amount, curtailing what threatens to be a lengthy litigation process.
"These allegations relate to a small group of individuals over a specific time period and are inconsistent with the strong service record we have earned since our inception in 1996," a USIS spokesman said. "Since first learning of these allegations nearly two years ago, we have acted decisively to reinforce our processes and management to ensure the quality of our work and adherence to OPM requirements. We appointed a new leadership team, enhanced oversight procedures, and improved control protocols."
USIS completed a background check to renew Snowden's high-level security clearance in 2011, when he was working for defense contractor Booz Allen Hamilton Inc. Snowden had previously worked for the Central Intelligence Agency.
USIS also investigated Aaron Alexis to work for the U.S. Navy during a check on behalf of the federal Office of Personnel Management. Alexis went on to fatally shoot 12 people in the Washington Navy Yard in September.
Providence Equity Partners Inc. bought USIS from PE firms Welsh, Carson, Anderson & Stowe and Carlyle Group in a May 2007 deal that valued the company at $1.5 billion.
Providence then made a $1.13 billion add-on acquisition of corporate security firm Kroll Inc. to provide even more bulk to USIS.
The fund manager suggested that if Altegrity could raise around $1 billion from an asset sale of a unit such as HireRight, it would have more flexibility to pursue litigation and a debt refinancing.
HireRight is an employment screening subsidiary of Altegrity.
If the litigation outcome is mitigated or if Altegrity scores a surprise windfall from asset sales, that fund manager might look at buying into Altegrity's senior debt.
David Tawil, co-founder and portfolio manager of distressed hedge fund Maglan Capital LP, shares the view that Altegrity's debt isn't an attractive value.
"Everything is trading pretty rich at this point," Tawil said. "We require a very cheap price in these situations."
Tawil said he sees buying Altegrity debt as a potential "binary" trade -- either it goes really well or really badly -- but he would only buy in if downside risk were capped at 10% to 15% and upside potential was in the 30% to 40% range.
Broker dealers have quoted Altegrity's term loans B and D as trading in the high 90s, the unsecured notes trading in the 80s, and senior subordinated notes trading in the 70s, Tawil said.
Altegrity has a $1.39 billion bank term loan due Feb. 21, 2015; an undrawn $75 million revolving credit facility due Nov. 21, 2014; $210 million in 12% senior unsecured notes due Nov. 1, 2015; $290 million in 10.5% senior unsecured notes due 2015; and
$150 million in 11.75% senior subordinated notes due May 1, 2016.
Once the scope of the litigation liabilities becomes clearer, Tawil may take another look at Altegrity's debt.
Altegrity is working with financial advisers from Evercore Partners Inc. and legal advisers from Debevoise & Plimpton LLP to address its upcoming debt maturities, The Deal has learned.
According to calculations by rating agency Standard & Poor's, those options may include bankruptcy. In a Jan. 28 report, S&P asserted that "a debt restructuring appears inevitable within the next six months, absent unanticipated significantly favorable changes in the company's circumstances."
S&P said it believes Altegrity's capital structure is "unsustainable" and that it expects a selective default or a Chapter 11 bankruptcy filing.
In that report, S&P downgraded Altegrity's corporate rating to CCC- from CCC+.
S&P analyst Brian Milligan explained by phone on Wednesday that the 2015 debt maturities are Altegrity's biggest liquidity problem, adding that compliance with debt covenants shouldn't be an issue between now and then.
"They are not going to run out of cash before the [2015 bank debt] maturity, and that gives them time to negotiate," he said.
A source close to the company said Altegrity is discussing recapitalization options with its financial advisers, asserting that a bankruptcy filing isn't on the table.
The source noted that "one option is for Providence [Equity] to provide an equity cure for the debt" through a capital injection.
In response, an Altegrity spokesman said, "The company believes it has ample liquidity and a number of options to address its upcoming debt maturities."


Read more: Debt maturities may blow the whistle on Altegrity - The Deal Pipeline

 

I've received a couple letters pertaining to this also.

 

I also received two letters. Now what.

 

Me, too. A few friends suggested I file a claim against them for damages I incurred when I was refused a job due to inaccurate information they provided. However, an attorney (whose name I found on this site) represented me for free and had the information corrected. I have no claim against the company and don't want to file a false pleading in revenge. Doing so could have far more ramifications that I want to deal with! Lol!

 

Feed your paper shredder!

 

All those starving shredders in China...