Evaluating a Distressed Debt Portfolio
February 18, 2026
The Challenge
A private debt fund originated a large volume of loans during the 2021–2022 market peak. As market conditions shifted, the fund’s capital providers placed the fund into wind-down. The original investment and asset-management teams were dismissed, and a third-party servicer was brought in to dispose of assets.
While many positions were resolved, the fund was left with a residual portfolio of approximately $200 million across 50 loans – the most complex and distressed portion of the book. Most assets were non-performing, in foreclosure, or otherwise impaired.
Summer Street Advisors was retained by a new investor group seeking to acquire the remaining portfolio. Summer Street Advisors evaluated the portfolio, presented viable resolution strategies and recommendations.
The Solution
Summer Street was retained by the portfolio buyer to conduct a comprehensive and disciplined review of the loan portfolio’s assets. Summer Street determined:
- Current collateral value and cashflows
- Realistic recovery timeline and carry costs
- Bid pricing and sensitivity analysis
This work translated distressed, opaque positions into a clear underwriting framework that provided the client with the clear understanding of the portfolio value – cashflows and associated risk.
The Outcome
Summer Street’s analysis and strategic guidance enabled the investor group to move forward with confidence, successfully effecting the purchase and financing of the $200 million distressed loan portfolio.
Summer Street transformed a residual “tail” of broken loans into a structured, financeable investment opportunity, unlocking a credible path forward for recapitalization.
SSA In Action
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