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  • September 2011 (Revised September 2011)
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Penn Warranty Corporation

By: Richard S. Ruback and Royce Yudkoff
  • Format:Print
  • | Pages:8
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Abstract

Penn Warranty Corporation sold warranty contracts to the used car market. During the recession in 2008/2009 Penn's sales declined by 26% Instead of growing by 11% as forecasted. Also, disruptions in financial and insurance markets created a cash shortfall. In the summer of 2009, Penn was facing the likelihood of default and possible foreclosure under its loan agreements. Its lender was refusing to waive covenants unless the company paid down $1 million of its outstanding debt of $7.75 million. The only source for such a refinancing was the equity investors who funded buyout of purchase of the company eighteen months earlier.

Citation

Ruback, Richard S., and Royce Yudkoff. "Penn Warranty Corporation." Harvard Business School Case 212-007, September 2011. (Revised from original August 2011 version.)
  • Educators

About The Authors

Richard S. Ruback

Finance
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Royce G. Yudkoff

Finance
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Related Work

    • May 2012
    • Faculty Research

    Brennan Warranty Corporation (B)

    By: Richard S. Ruback and Royce Yudkoff
    • September 2011 (Revised September 2011)
    • Faculty Research

    Penn Warranty Corporation

    By: Richard S. Ruback and Royce Yudkoff
Related Work
  • Brennan Warranty Corporation (B) By: Richard S. Ruback and Royce Yudkoff
  • Penn Warranty Corporation By: Richard S. Ruback and Royce Yudkoff
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