In August, another one of Medallion’s subsidiaries, Medallion Funding Inc. was forced to provide additional collateral to its lender Sterling Bank in exchange for a maturity extension. To satisfy the demands, Medallion transferred two oil paintings from its fine art financing company, collectively worth $3 million.
But those maneuvers could be for naught, considering that Medallion is already openly in default. On October 24, Metropolitan Commercial Bank, the lender to Medallion Funding Chicago Corp, filed suit against the company in the New York Supreme Court for failing to repay $8.8 million of loans that came due on October 17, according to court filings. The hearing is set for January 25.
If Medallion receives a judgment in the MetBank suit, it could trigger a cross-default in other loan agreements across the corporate family. However, even should Medallion receive a favorable ruling, it is still running out of liquidity as another wave of maturities approaches, including $64 million of bank note maturities over the next twelve months, as well as a $108 million due to its largest lender DZ Bank on May 2017. Across its various entities, Medallion had only $24.7 million of cash and cash equivalents as of September 30.