Two budding Central Ohio entrepreneurs have identified a problem in the bankruptcy marketplace and developed a streamlined solution -- a new company called One Exchange Street.
One Exchange Street is an online bankruptcy claims trading engine that Todd Zoha and Sean O’Riordan established in January of this year. The startup company is designed to be a one-stop shop for both buyers and sellers of bankruptcy claims.
While working together in the turnaround and restructuring advisory unit of a global business consulting firm, Zoha and O’Riordan noticed something critical.
“We were working on the Lehman Brothers bankruptcy and saw how the marketing for unsecured bond positions was very transparent and liquid,” explains Zoha, President and CEO of the company. “We wondered why there wasn’t that same kind of transparency and liquidity for other types of bankruptcy claims, specifically general unsecured claims and administrative claims.”
Buyers of bankruptcy claims are generally sophisticated about the process, he notes. “If you’re a claims seller, however, you’re getting all these calls and contacts from buyers, and you have no way to evaluate whether the price you’re being offered is fair and reasonable,” Zoha says. “This is a big problem for sellers.”
With One Exchange Street, Zoha and O’Riordan have opened up and streamlined the process for bankruptcy market participants. “Claims sellers can list their claims and see recent transaction amounts for similar claims,” Zoha explains. They can also see prices at which bidders are willing to buy. “An important advantage we offer is that all members on our exchange agree to transact using a standardized claim transfer agreement. This enables real-time execution of transactions. These two things differentiate us from our competitors."
There are advantages for buyers of bankruptcy claims as well. “First, we’re a source of information for them about claims sellers,” Zoha says. “Buyers can also aggregate and buy multiple claims at once. Finally, buyers can turn around and sell a claim to other institutional buyers.”
Zoha and O’Riordan raised approximately $600,000 from friends and family for their startup and received a $300,000 investment from
TechColumbus in April.
Source: Todd Zoha, One Exchange Street
Writer: Lynne Meyer