The Official Digital News Bulletin of The M&A Advisor

ROGER’S CORNER: Foreclosure Investing Secrets from the Bankruptcy Expert, J. Scott Victor

Find and listen to J. Scott Victor’s podcast episode at the following media links:

Spotify :
https://open.spotify.com/episode/5TztzKtnHbpq2Z2Wmot8Sz?si=tjveG68_Qbe1rQ9xMkqJVg
Apple Music:
https://podcasts.apple.com/ph/podcast/m-a-advisor-podcast/id1735703781?i=1000651429299

Hosting The M&A Advisor’s event- the 2024 Distressed Investing Summit, featuring the 18th Annual Turnaround Awards was an awesome way to end March. It’s energizing to see the impact this event has on the industry. During the 18th Annual Turnaround Awards Night gala, J. Scott Victor was the guest/presenter for The M&A Advisor’s Special Leadership Awards recipients- Drew McManigle, Founder & CEO, MACCO Restructuring Group, and Teresa Kohl, Managing Director, SSG Capital Advisors.

To sustain the high from the successful event, we have invited J. Scott Victor to grace our new M&A Advisor Podcast. The Podcast aims to shine a light on the many outstanding Thought Leaders and members of The M&A Advisor, empowers young entrepreneurs and M&A professionals to stay informed about industry trends, including mergers and acquisitions, private equity, investment banking, and finance strategies, and provides valuable insights and actionable ideas to inspire them.

Introducing the Bankruptcy Guru, J. Scott Victor, who is also, The M&A Advisor Hall of Fame Awardee and Leadership Special Award Recipient. Scott Victor is the founding partner and Managing Director of SSG Capital Advisors, LLC, and is an internationally recognized leader in the restructuring industry with about 40 years of experience representing companies in bankruptcy proceedings and out-of-court workouts.

Scott is a Fellow of the American College of Bankruptcy and a Past Chairman (2016) and President (2015) of the Turnaround Management Association (TMA) Global. He is also affiliated with the American Bankruptcy Institute (ABI).

Scott holds a B.A. from the University of Pennsylvania and a JD from the University of Miami School of Law.

Let me take you into my conversation with Scott.

  1. Taking a round-about way into M&A
    • Scott went to the University of Pennsylvania from 1976 to 1980 intending to become a Thoracic Surgeon to join his brother in the family medical business. However, things did not go as planned since his love for a beautiful Cuban American girl from Miami made him go to the University of Miami to take up law from 1980 to 1983, envisioning a life as a Lawyer in Miami with this beautiful girl as his wife.
    • Sadly, destiny had a different plan for Scott. His fiancé broke off the engagement in 1983 and Scott had no choice but to return to Pennsylvania with his JD from the University of Miami School of Law. He then went to work with a debt-side practitioner Melvin Lashner, one of the Deans of the Philadelphia Bankruptcy Bar. In 1983, Scott worked as a Bankruptcy Lawyer on the debtor side/trustee side of Chapter 7 in Philadephia.
  2. Becoming a Bankruptcy Guru
    • Scott Victor, now working as a Bankruptcy Lawyer in 1983 found himself smack-dab in the middle of the early years of the Bankruptcy Code that was released in 1978, working alongside companies against bankruptcies.  Scott had to work 20 hours a day but was having a ball learning about Bankruptcy, and interpreting the code where nobody else knew about it. Those days were indeed the wild, wild west of Bankruptcy.
    • This is when you know! Yes, THIS IS how Scott Victor became a Bankruptcy guru.
    • Scott truly loved being a Bankruptcy lawyer so much that he became named partner, 3 years later becoming part of Lashner, Victor, and Maschmeyer (1983 to 1990). In 1990, he moved to another boutique firm called Shaiman, Phelan, Victor & Maschmeyer, P.C. (1990-91).
    • “Fast forward to now- 40 years later, I am “Papa Smurf” with a white beard, pointing to a statue in his office cabinet,” Scott joked lovingly.
  3. Deal-making with a heart
    • During his Law practice in Bankruptcy, Scott handled small and big cases. In some notable cases, he had two (2) Sentinel cases: Lionel Trains and Lionel Kiddie City. These companies went into bankruptcy and previously, it was required to have a plan for the organization undergoing bankruptcy and the creditors had to vote on the sale of company assets. These requirements changed under the Bankruptcy Code and the enactment of the 363 B section that allowed the sale of assets free and clear of liens, claims, and encumbrances. The early practitioners of the code, Scott included, created this rule to sell a going concern under 363.
    • The next big case after Lionel Trains was Abbott’s Dairies. Abbott Dairies was a big milk company in Pennsylvania. Those who owned a home in Philadephia and the suburbs at that time got their milk and whatever else they wanted such as juice, milk, and cupcakes delivered from Abbott’s Dairies every day. And so, Abbott Dairies got themselves in trouble and Scott was hired by Cumberland Dairies a creditor of Abbott’s which was going to be acquired by another big dairy producer- Johanna Farms in the tri-state area, Philadephia, Delaware, and New Jersey.
    • So what happened next was that a judge in Philadephia allowed Johanna Farms to be the interim manager of Abbotts Dairies which Scott and his group contested to be in bad faith since this will put into disadvantage other buyers when the potential buyer is also managing the company under bankruptcy. Scott wrote the brief which won at the Third Circuit Court, and where 363 (M) became a gold standard in 1984. There should always be good faith for an out-of-ordinary course sale under 363 (B) outside of a plan.
    • On February 29, 2000, Scott became an Investment Banker, where he officially became a deal guy.  Then, by a stroke of luck, Scott went from Investment Banking to Special Situations in April 2001 with the birth of their new company, SSG Capital Advisors with a deal with Berwynd.
    • SSG Capital Advisors according to Scott is a 99 percent special situations company with clientele representing companies facing challenges, whether, financial, legal, balance sheet, or cashflow.  SSG refinances them if possible, from their existing debt when their senior lenders go out and restructure the balance sheet if that’s feasible or sell them in or out of bankruptcy in article 9, in an ABC, but primarily through Chapter 11 or out-of-court sales.
    • Now, SSG Capital Advisor has closed over 450 transactions since its founding in 2000 serving all types of industries, and all sizes from pre-revenue to a billion in revenue. SSG is comprised of an unbelievable team of 13 professionals.
    • On investing in clients, here is what Scott strongly believes:
      • “It’s a conflict. So, in special situations, I view it as a horrible conflict. Not to invest in any of our clients. You certainly can’t in a Chapter 11 scenario. And I won’t allow it outside of Chapter 11. My investments are in real estate and family real estate. My partners invest in several private equity firms, but I do not. At all. Ever,” stressed Scott.
      • If we’re an advisor for a distressed company, it’s just not kosher to ever be a part of any restructuring, sale, or whatever as an equity holder. Ever,“ Scott said convincingly.
  4. Quotes from J. Scott Victor
    • Scott shares these inspiring words and life lessons with our M&A enthusiasts.
      • “Learning what NOT to do is just as important as knowing what to do.”
      • “I cannot stress it enough, but I encourage my subordinates to be involved in the industry, consumer bankruptcy assistance project- a big Philadelphia pro bono bankruptcy project.”
      • “At the end of the day, all you can sell is yourself as your brand, morals, professionalism, and to be the best you can be. And your word is your bond, period. “

Time flew by so fast. Talking to Scott was so much fun! My interesting conversation on bankruptcy and its history and practice through the eyes of J. Scott Victor- his experiences, trials, works, and life. I hope you learned as much from him as I did.

Come back and join me again as I take another deep dive into the M&A world with the industry’s leading minds in the next issue!

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Do you want to meet J. Scott Victor and the other Thought Leaders of the mergers and acquisitions industry in person? Join our next event- the 2024 Leadership in Dealmaking Summit, featuring the 15th Annual International M&A Awards and the 15th Annual Emerging Leaders Awards in New York, NY on September 24 and 25, 2024. Gear up for this, folks!

HURRY! Save a seat and schedule a meeting with Scott today!

If you would like to register, please visit our website at www.maadvisor.com.  If you want to know more about registrations and tickets to this event or our other events, please email us at events@maadvisor.com or call +1 (212) 951-1550.

Curious about The M&A Advisor Podcast?
With the M&A podcast and active participation in The M&A Advisor’s EVENTS throughout the year, subscribers will gain information, expand their business network, learn, and be inspired by only the BEST in the industry to achieve personal success. Remember, knowledge is power! Don’t just leave success to chance. Take that small step NOW.

Find and listen to J. Scott Victor’s podcast episode at the following media links:

Spotify :
https://open.spotify.com/episode/5TztzKtnHbpq2Z2Wmot8Sz?si=tjveG68_Qbe1rQ9xMkqJVg
Apple Music:
https://podcasts.apple.com/ph/podcast/m-a-advisor-podcast/id1735703781?i=1000651429299

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