DSI'S Role

Financial Advisor and Expert Witness to the Chapter 11 Trustee

Services Provided

  • Business Valuation
  • Expert Witness
  • Financial Restructuring
  • Forensic Accounting
  • Preference Analysis
  • Wind Down Management


Case Highlights

  • Prepared report and provided expert testimony
  • Developed an estimate of a contingent liability associated with insurance claims

Case Narrative

Automotive Professionals, Inc. (“API”) was in the business of marketing vehicle service contracts (“VSCs”) to consumers through automobile dealerships and agents. These VSCs provided consumers with an extended warranty for the payment of automobile repairs for a fixed period of time beyond the expiration of the original manufacturer’s warranty.

At the time of its bankruptcy filing, API had approximately 350,000 consumers covered by the VSCs it sold. DSI was appointed Financial Advisor to the Chapter 11 Trustee for API and, in that capacity, worked with the Trustee on the wind down of the company. As a part of these efforts, DSI reconciled and allocated over 620 dealer reserve accounts, which included 2,770 separate dealers, as well as assisted in settlement negotiations with major insurance carriers involved, including Marathon Financial Insurance Company, Ohio Indemnity and Travelers.

DSI was also retained by the Chapter 11 Trustee of API to provide an expert report and testimony regarding the solvency of the company at the time certain transactions were alleged by the Trustee to be preferences or fraudulent conveyances. A key issue in the case was determining the value-impact of liabilities arising out of future claims against vehicle service contracts that contained an option for a full refund to the contract purchaser if no repair/service claim was made during the pendency of the contract.