As part of its restructuring, debt collector SquareTwo Financial Services reached an agreement with Resurgent Holdings to acquire substantially all of SquareTwo’s portfolio of assets. The acquisition will occur through the purchase of the equity interests of certain of SquareTwo’s subsidiaries, including its Canadian subsidiaries and business.

Upon completion of the transaction and following the transfer of the servicing of accounts in the U.S. to Resurgent and its affiliates, SquareTwo will wind down its U.S. operations, including those of its subsidiary Fresh View Solutions. The wind-down process is expected to be completed by the end of 2017. SquareTwo’s Canadian operations will continue under Resurgent’s ownership.

To facilitate the transaction in an expedient manner, SquareTwo and its affiliates filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York. SquareTwo will also be filing for recognition of the U.S. Chapter 11 proceedings under Part IV of the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice.

SquareTwo enters Chapter 11 having already secured the agreement and necessary support from a significant number of its secured lenders to undertake a prepackaged restructuring plan that contemplates a change of control transaction pursuant to the restructuring plan. According to documents filed with the court, Cerberus Capital Management has agreed to provide $58.5 million in DIP financing in the form of a superpriority revolving credit facility.

“Unfortunately, changes in the regulatory and business environment over the last several years have had a significant economic impact on the company,” said J.B. Richardson, Jr., COO of SquareTwo. “We reviewed many strategic alternatives over the past nine months to find a path that would allow us to operate competitively and continue operations with our workforce in place. We ultimately determined that the sale to Resurgent and the attendant wind-down was the most value-maximizing approach. We would like to thank our employees for their dedication to SquareTwo during a challenging time and we are committed to handling the transition period in a professional and respectful manner.”

AlixPartners is serving as restructuring advisor, and Keefe, Bruyette & Woods, is serving as SquareTwo’s financial advisor. Willkie Farr & Gallagher is providing legal counsel in the U.S., and Thornton Grout Finnigan is providing legal counsel in Canada to SquareTwo. Foley & Lardner is providing legal counsel in the U.S., and McCarthy Tétrault is providing legal counsel in Canada to Resurgent Holdings.

SquareTwo’s primary business is the acquisition, management and collection of charged-off consumer and commercial accounts receivable that are purchased from financial institutions, finance and leasing companies, and other issuers in the U.S. and Canada.

Resurgent Holdings is an acquirer, manager and servicer of consumer debt portfolios across the credit spectrum. It is an affiliate of Sherman Financial Group, a privately-held global investment company.