Hudson & Keyse in Painesville, Ohio, was in the business of collecting on debts that had gone bad. Now, however, the company is struggling with their own debt problems. They recently filed for Chapter 7 bankruptcy in the face of millions in debts to more than 200 creditors of its own.

The company had been around for more than two decades until they closed their doors and laid off the 40 employees that remained with them, according to acting president and CEO Mark Finston.

In 2008, they had already reduced their labor force to the 40 employees, down from 150.

The company filed for Chapter 7 bankruptcy protection in early September. In the filing, Hudson & Keyse listed more than $63 million in liabilities to over 200 creditors, compared with just $288,000 in assets, according to Crain’s Cleveland Business.

Finston had a good deal to say about the company’s downfall, and according to the article, “the irony of a debt collector drowning in its own debt was not lost” on him.

He, apparently, put a good deal of the blame for the Chapter 7 bankruptcy filing on those that had come before him, the previous management.

“When people are charged with financial responsibility of running a company, they need to understand that they have responsibilities for analyzing the company’s financials properly. If they don’t, this is the kind of thing that can happen,” he said.

He wouldn’t say just who he was referring to in offering the critique of the former management of the debt collection firm. They were in charge, though, in 2007 and 2008, he said.

Finston came on board in 2008, to try and help pull the company out of its tailspin. The former president of the company, Scott Clarke, was hired at around the same time, towards the same effort of making Hudson & Keyse into a viable company economically.

Most of the company’s liability is owed to an Atlanta company that had purchased most of Hudson & Keyse debt from a group of banks, back in March of 2010. Other entities that the debt collection company owes money to include employees owed wages and salaries, the IRS and government units.

Finston, said a bad business model was one of the big financial problems that led to the company’s demise. That model, he said, overstated how much the company could collect on its assets from month to month.

Back in 2008, the company had as much as $90 million in debt, a large part of which it had borrowed from a group of banks. Finston claimed that the loans were not structured well. When the banks wanted to get out of the agreement, they gave the company two options: sell or sell the debt. The bank rejected three potential buyers for the company, and so Hudson & Keyse sold the debt.

In June, most of the company’s board members retired, and Finston stayed on to help employees negotiate the bankruptcy and closing.

He went so far as to contact other local businesses, to make sure that laid off employees would have the chance to interview and hopefully find work at other businesses.

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