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 conducted a comprehensive disciplined review of the loan portfolio to determine:
- 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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