LMI Solutions Goes into Receivership

Cartridge-remanufacturer LMI Solutions of Phoenix, Arizona, has gone into receivership. Court proceedings are said to have been initiated on August 12th by a lender to LMI, Midcap Financial, in the Superior Court of the State of Arizona.

According to court documents, LMI was granted loans totaling approximately $14 million. It owes some $5.6 million on the credit agreement, with the bank appearing to demand the loans be paid immediately, which caused the need for LMI to file for receivership.

According to court documents, LMI has been negatively affected by increasing competition, as well as an expanded Xerox-HP Inc. partnership, under which “dealers in the Xerox Business Solutions network would be mandated to use only HP Products. Members of the Xerox business network included Chicago Office Technologies Group, [LMI’s] single largest customer.”

Annie Willert, vice president of sales and marketing for LMI Solutions, explained that receivership is a step in which a trustee is legally appointed to act as the custodian of a company’s assets or business operations. It’s typically invoked during legal proceedings, with the goal of returning the company to a profitable state and thereby avoiding bankruptcy.

Willert also explained that LMI’s private-equity partners have decided to exit the industry, thus putting LMI in a position to sell their equity. The bank has required an investment banker to advise on a sale process “– thus the receivership.”
According to Willer: “This is in the best interest of all LMI employees, customers and the remanufacturing industry – as it will ensure the best strategic fit to solidify LMI’s long-term position in the industry. We have today, and will continue in the future to have a going concern.”

MCA Financial Group has been appointed the receiver in this action, effective immediately. LMI, “its agents, employees, managers, members, directors, partners, representatives, and affiliates must immediately turn over to the Receiver sole possession, custody, and control of the Collateral.” This includes “the Borrowers’ records, books of account, ledgers and all business records,” contracts, leases, tax identification numbers and “immediate and unlimited access to and full use of any real property interests.”

About LMI Solutions

LMI Solutions is an R2-certified manufacturer, distributor, and recycler of replacement toner cartridges, remanufactured printers, parts and related imaging supplies, serving resellers throughout the United States and Canada. LMI states that it distributes thousands of SKUs to over 5,000 resellers, including the most popular OEM products, and is a recognized global leader for managed print services (MPS) infrastructure and support.

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