Patriot National Inc. has defaulted on its credit agreement with its lenders and does not expect Guarantee Insurance Co., the customer that generated most of its revenue, to make any of the payments owed to it, Patriot National said in a regulatory filing.
Guarantee Insurance was placed into receivership earlier in November. In recent meeting with the Florida Office of Insurance Regulation, Patriot National sought an agreement with the regulator that would have allowed Guarantee Insurance to continue making its payments while it was in receivership.
However, Patriot National "does not believe these efforts will be successful," the company said.
Patriot National has terminated about 250 employees, or about a third of its workforce, and it expects "a major portion" of its revenue and cash flow "to cease," it said in the filing.
The company entered a forbearance agreement with its lenders and with Cerberus Business Finance, LLC as collateral and administrative agent under which the lenders agreed to not call their loans until Dec. 3. Cerberus may also make advances up to $4 million to Patriot National, though the company noted there is no assurance that the advance will be sufficient "to sustain operations" during the forbearance period.
Patriot National's stock crumbled Nov. 22. The shares were down 62.75% to 39 cents as of 3:22 p.m. ET.
