Shares of MSP Recovery, Inc. (NASDAQ: MSPR) surged dramatically in pre-market trading, climbing by 152.34% to reach $3.23. This sharp uptick follows the company’s announcement of a comprehensive restructuring initiative aimed at improving financial stability and operational efficiency.
Strategic Agreements and Debt Reduction
MSP Recovery disclosed that it has entered into a term sheet with Virage Capital Management, Hazel Partners Holdings, LLC, and their affiliates to implement several restructuring transactions. Key elements include converting significant debt into equity, reducing $1.2 billion in company-guaranteed debt, and launching a new servicer entity focused on MSPR’s core mission—claim recoveries under Medicare Secondary Payer (MSP) laws.
As part of this agreement, Hazel will provide up to $25 million in operational funding for the newly created servicer subsidiary, which will manage a technology-driven claims recovery platform. This entity will be fully independent of MSPR’s existing operations and led by a newly appointed CEO.
Bridge Financing and Operational Support
Hazel has also agreed to extend an additional $9.75 million in bridge financing to MSP Recovery, raising its total contribution under the operational collection floor facility to $25.75 million. The funding arrangement will be disbursed in tranches of up to $1.75 million monthly, contingent upon milestone achievement beginning in September 2025.
Additionally, MSP Principals have pledged $25 million in collateral to secure future working capital needs beyond July 2025. The restructuring plan also includes a cost reduction strategy projected to save $5.6 million annually through the new servicer’s streamlined operations. MSP Recovery will retain ownership of its intellectual property, licensing it to the new entity for operational use.
Equity Conversion and Governance Changes
In exchange for a 43% equity stake in MSP Recovery, Virage will waive all existing claims and liens, effectively settling approximately $1.2 billion in debt. Furthermore, company insiders have committed to converting roughly $144 million in debt into Class A common shares, pending tax and board approvals.
The new servicer will be governed by an independent board, including two experienced executives and one MSP Recovery board member, subject to Hazel’s approval. These changes are expected to enhance data capabilities and recovery processes while positioning MSPR for long-term sustainable growth.
