Moody’s Investors Service said it downgraded SquareTwo Financial’s corporate family and senior secured ratings to Caa1 from B3 with a negative outlook. This is a conclusion of a review initiated on April 2, 2015.

Moody’s said the downgrade reflects weakened profitability and cash flow generation, as well as its growing negative equity as a result of reduced supply of charged-off debt and elevated pricing. These conditions have negatively impacted SquareTwo’s profitability and debt coverage for more than a year as charged-off debt supply has been slow to normalize to historical levels.

The negative outlook reflects uncertainty regarding SquareTwo’s ability to significantly improve profitability, capital and liquidity at a sensitive time with maturities on the senior revolving credit facility and the senior second lien notes occurring in 10 months and 22 months, respectively.

Access the full Moody’s research report here.