Phoenix Bankruptcy Law News

Consulting Firm That Advised Gadhafi Files for Bankruptcy

Having a brutal dictator on your list of clients probably isn't good for business.

Strategic consulting firm Monitor Co. Group LP came under fire back in 2011 when it was revealed that the company had accepted a $3 million contract with the Libyan government to improve dictator Moammar Gadhafi's public image, The Wall Street Journal reports.

The resulting bad press turned out to be the last nail in the coffin for the struggling company.

Monitor filed for Chapter 11 bankruptcy protection on Wednesday. The company primarily provides consulting services aimed at helping companies speed up the growth of their business. However, Monitor was involved in much shadier dealings as well.

The company's ties with Gadhafi came out prior to the U.S. intervention in Libya. The two main goals of the project were to produce a makeover for Libya and re-introduce Gadhafi "as a thinker and intellectual, independent of his more widely known and very public persona as the Leader of the Revolution in Libya," according to an internal document.

The company later admitted it was a mistake to take on the contract, but the damage had already been done. Numerous publications covered the story, forever tarnishing Monitor's reputation.

However, the Libya contract wasn't Monitor's only problem. In its filing, the company said the demand for consulting work dramatically slowed during the recession. Monitor's partners put up $4.5 million to improve liquidity and passed on $20 million in bonuses in 2009.

In general, Chapter 11 is the most common form of bankruptcy for companies. In a Chapter 11 bankruptcy, the debtor company restructures in order to pay back its creditors. Oftentimes, that involves selling off assets.

Monitor plans to sell its assets to Deloitte for $116.2 million. However, that offer will be tested at auction.

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