Earlier this week Hagerstown, Md., disaster recovery CUSO Ongoing Operations faced its own disaster – a possible forced asset sale demanded by a secured creditor that could have wiped out the CUSO.
But the threats have been averted, said Board Chairman Bruno Sementilli, who also serves as CEO of $782 million Quorum Federal Credit Union in Purchase, N.Y.
“We are glad this now is behind us,” said Sementilli, who indicated “the board has been intensely wrestling with this for several weeks, but we have been able to work out something with the creditor.”
Steve Gubner, a Woodland Hills, Calif., lawyer for the creditor, Clearsky Holdings, told Credit Union Times that the forced asset sale – originally scheduled for Oct. 31 – “has been postponed.”
He elaborated that he thought the sale would never be held. “Hopefully we can put this to bed,” Gubner said, indicating a resolution was at hand. The debt involved notes the CUSO had assumed when it bought the Cloudworks hosting operation in 2011.
At $2.6 billion Northwest Federal Credit Union in Herndon, Va., one of Ongoing Operations’ founding credit unions, CEO Chris McDonald said Thursday he was “disappointed” that matters had reached the place they did but, he stressed, “I still think Ongoing Operations is headed in the right direction.”
McDonald added, “We are not looking for alternatives. We plan to stay put in Ongoing Operations.”
Looking ahead, Sementilli acknowledged that Ongoing Operations – which has grown to serve 500 clients – will have to work “to bring back confidence that may have been lost.”
He added that, in his view, the CUSO’s business fundamentals remain sound – “the business will grow” – and, therefore, there may be cash flow needs that could require additional investments from Ongoing Operations’ credit union owners.
“The investors are open to hearing about those needs,” said Sementilli.