BUTLER & HOSCH — BOB HOSCH — LAW FIRM CLOSURE MEMO
Important message from Bob Hosch, CEO and Senior Partner of Butler & Hosch
ORLANDO, FLORIDA May 14, 2015
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It is with great sadness that I report to all of you regarding the difficult financial status of Butler & Hosch and its affiliates[1] (“BH”) which has resulted in the filing of the state court Assignments for the Benefit of Creditors (“ABC”). I have voluntarily stepped down as CEO and Senior Partner of BH. The control of the BH companies has been voluntarily placed in the hands of an experienced third-party fiduciary, Mr. Michael Moecker.
BH has been one of the most recognized brands in the default mortgage legal industry (“Industry”). Our Industry has experienced seismic consolidations following the Great Recession. BH saw great opportunity to acquire competitors and take advantage of economies of scale to build our platform. Unfortunately, BH grew too fast and could not merge processes from the acquired entities quickly enough to meet our economic forecasts which resulted in short term cash crunches and our ability to attract new capital in the interim.
In the best interest of our BH employees, our loyal customers and our lenders and vendors, I have made this most difficult decision. B&H has recently been working with outside counsel, Roy S. Kobert and his experienced work out team at GrayRobinson to guide us through this process. After exhausting all plausible remedies, including efforts to solicit additional funding from our existing lender and new strategic partners, we were left with no other alternatives than to engage Mr. Moecker.
BH was founded in Florida in 1972. In 1997, BH made the calculated decision to limit its representation to residential mortgage lenders and servicers. Since that time, BH has expanded and implemented its strategic footprint in the Industry covering Alabama, California, the District of Columbia, Delaware, Florida, Georgia, Indiana, Louisiana, Maryland, Mississippi, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia, Washington, and West Virginia.
Beginning in 2013, for the first time, BH made the decision to grow, not from within, but with strategic acquisitions of members of its competitive set. Market conditions presented several attractive suitors. The first such acquisition involved a competitor in distress, which was acquired out of a Delaware bankruptcy case. This strategic acquisition resulted in the integration of several platforms, including Cal-Western Reconveyance in Arizona, California, Idaho, Nevada, Oregon, Texas, Utah, Washington, as well as RTS Pacific in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon and Washington.
The last strategic acquisition presented the most exciting opportunity and BH’s biggest challenge: a merger of equals. Following its closing on February 1, 2015, BH now had a national footprint spanning 27 States and the District of Columbia.
As a direct result of the latest merger, BH was (i) actively prosecuting 50,000 to 60,000 foreclosure files at any given moment, (ii) employed nearly 700 attorneys, paralegals and back office staff, and (iii) had access to 90% of the foreclosure industry in the United States.
How does the filing of these ABC’s cases impact you? Though Mr. Moecker has complete access to our assets, he will not have sufficient cash on hand to fund payroll at the end of this week. Without BH employees and attorneys there is no ongoing operation. BH cannot continue to function. To be clear, while I continue to hold out hope that our existing lender and/or strategic partners may provide an infusion of cash today, without it, BH will have no choice but to close its doors immediately.
The challenge was to integrate the merger of equals while spurring growth in a declining market environment in our industry. BH failed to meet this challenge and I too share in that failure. I am sorry. Thank you again for your past support and loyalty to BH during its nearly 35 year legacy.