New Cynergy Data Fallout/Important - GoFuckYourself.com

IPSKeith · 09-30-2009, 08:04 AM

I posted a blog on the bankruptcy filing of Cynergy Data a few weeks back. I wanted to take this opportunity to follow up and inform our community of what has happened since that point and how it may effect our business in the future. Some of this was for seen but the extent in which it has occurred was unexpected.

Cynergy Data as we know is an extremely large company that processes over $10 billion in credit card payments over a twelve month period. Cynergy?s card volume is the result of transactions with over 80,000 merchants. Their sponsor bank is Harris Bank which all of the volume is housed with.

According to Cynergy?s Petition for bankruptcy, the company has assets of $109 million against debts of $186 million.ha As stated in the Declaration, Cynergy entered into a senior credit facility for $39.8 million with Comerica Bank as agent, and a junior credit facility for $80 million with Dymas Funding Company as agent (both credit agreements are pre petition).ha The company lists its 10 largest unsecured creditors as follows:
Process America ... $2.8 million
Paymentech ... $2.6 million
TSYS ... $1.4 million
wwwmygrantsitenet ha... $1.4 million
Second Source ... $1.1 million
DJM*Lifstylefit.com ... $900,764
wwwfedgrantusa.com ... $812,629
Merchant Processing Services ... $756,782
Pivotal Payments ... $509,068
Fast Transact ... $503,110
**Source found at delawarebankruptcy.foxrothschild.com.

Cynergy filed for bankruptcy in order to receivehabankruptcy court approval of the sale of substantially all of its assets to the ComVest Group under section 363 of the United States Bankruptcy Code.ha Cynergy and ComVest entered into an asset purchase agreement following an auction process wherein Cynergy contacted over 48 different parties that might have an interest in purchasing its assets.ha In response to its marketing efforts, 24 parties executed confidentiality agreements allowing them tohareview Cynergy's books and records in order to submithaa bid.ha Three final offers were submitted and ComVest and Cynergy executed an asset purchase agreement on August 26, 2009.

ComVest then contracted Harris Bank to oversee the audit for ComVest. One would think the obvious reason for the hiring of Harris Bank is the fact that Harris Bank is the sponsor bank for Cynergy. Cynergy Data has their own processing platform. They are part of Cynergy Data but are just the platform portion of their business. They are used by other processors just as First Data?s platform is. Our experience with the Cynergy platform is that they follow extremely strict protocol. We have numerous merchants who use this platform through IPS as an agent office.

Here is where the story gets a little convoluted. Harris Bank in turn subcontracts the Cynergy platform to perform the actual audit they were hired to oversee. Why would Harris Bank hire the platform service of the company they were contracted to oversee the audit for to do the actual audit? The answer seemed to show itself through different acquirers and merchant providers in the industry.

Different merchant providers and acquirers have complained of merchants that are boarder with Harris Bank being audited by the platform service at Cynergy data. Even those merchants who were not on that platform were being audited. Does that mean that Harris Bank has taken this opportunity to review their book of business? It would seem the catalyst to this action for Harris was the enormous losses they absorbed by the bankruptcy of Cynergy Data. This would allow Harris Bank to properly asses their portfolio make adjustments needed before any more losses occur. One would think that the current conditions in the economy had placed additional pressure to perform this review. If an actual full review is taking place that may include but not be limited to changing reserve amounts, changing the discount rates, changing the hold or even closing merchants accounts. Accounts that are miscoded could fall under greater scrutiny. They would be properly coded and adjustments would be made.

If you have been affected by this or just want to explore other solutions please let me know if there is anything we can do to assist your organization.

I hope this blog has been informative for my friends in the industry. I would appreciate greatly to hear your feedback and if anyone else has experience the audits I have discussed in this blog.

Regards,
Keith Reilly
O.800.439.1974 ext.122
[email protected]

09-30-2009, 08:04 AM	#1
IPSKeith Confirmed User Join Date: May 2009 Posts: 212	New Cynergy Data Fallout/Important I posted a blog on the bankruptcy filing of Cynergy Data a few weeks back. I wanted to take this opportunity to follow up and inform our community of what has happened since that point and how it may effect our business in the future. Some of this was for seen but the extent in which it has occurred was unexpected. Cynergy Data as we know is an extremely large company that processes over $10 billion in credit card payments over a twelve month period. Cynergy?s card volume is the result of transactions with over 80,000 merchants. Their sponsor bank is Harris Bank which all of the volume is housed with. According to Cynergy?s Petition for bankruptcy, the company has assets of $109 million against debts of $186 million.ha As stated in the Declaration, Cynergy entered into a senior credit facility for $39.8 million with Comerica Bank as agent, and a junior credit facility for $80 million with Dymas Funding Company as agent (both credit agreements are pre petition).ha The company lists its 10 largest unsecured creditors as follows: Process America ... $2.8 million Paymentech ... $2.6 million TSYS ... $1.4 million wwwmygrantsitenet ha... $1.4 million Second Source ... $1.1 million DJMLifstylefit.com ... $900,764 wwwfedgrantusa.com ... $812,629 Merchant Processing Services ... $756,782 Pivotal Payments ... $509,068 Fast Transact ... $503,110 *Source found at delawarebankruptcy.foxrothschild.com. Cynergy filed for bankruptcy in order to receivehabankruptcy court approval of the sale of substantially all of its assets to the ComVest Group under section 363 of the United States Bankruptcy Code.ha Cynergy and ComVest entered into an asset purchase agreement following an auction process wherein Cynergy contacted over 48 different parties that might have an interest in purchasing its assets.ha In response to its marketing efforts, 24 parties executed confidentiality agreements allowing them tohareview Cynergy's books and records in order to submithaa bid.ha Three final offers were submitted and ComVest and Cynergy executed an asset purchase agreement on August 26, 2009. ComVest then contracted Harris Bank to oversee the audit for ComVest. One would think the obvious reason for the hiring of Harris Bank is the fact that Harris Bank is the sponsor bank for Cynergy. Cynergy Data has their own processing platform. They are part of Cynergy Data but are just the platform portion of their business. They are used by other processors just as First Data?s platform is. Our experience with the Cynergy platform is that they follow extremely strict protocol. We have numerous merchants who use this platform through IPS as an agent office. Here is where the story gets a little convoluted. Harris Bank in turn subcontracts the Cynergy platform to perform the actual audit they were hired to oversee. Why would Harris Bank hire the platform service of the company they were contracted to oversee the audit for to do the actual audit? The answer seemed to show itself through different acquirers and merchant providers in the industry. Different merchant providers and acquirers have complained of merchants that are boarder with Harris Bank being audited by the platform service at Cynergy data. Even those merchants who were not on that platform were being audited. Does that mean that Harris Bank has taken this opportunity to review their book of business? It would seem the catalyst to this action for Harris was the enormous losses they absorbed by the bankruptcy of Cynergy Data. This would allow Harris Bank to properly asses their portfolio make adjustments needed before any more losses occur. One would think that the current conditions in the economy had placed additional pressure to perform this review. If an actual full review is taking place that may include but not be limited to changing reserve amounts, changing the discount rates, changing the hold or even closing merchants accounts. Accounts that are miscoded could fall under greater scrutiny. They would be properly coded and adjustments would be made. If you have been affected by this or just want to explore other solutions please let me know if there is anything we can do to assist your organization. I hope this blog has been informative for my friends in the industry. I would appreciate greatly to hear your feedback and if anyone else has experience the audits I have discussed in this blog. Regards, Keith Reilly O.800.439.1974 ext.122 [email protected]