CHICAGO — Chicago-based management and consulting firm Development Specialists Inc. is expanding its reach in the muni finance arena with a new venture targeted at severely distressed municipalities and other governments in need of restructuring services.

DSI founder and president William Brandt will lead the new venture, DSI Civic Financial Restructuring, along with former Illinois budget director John Filan, who joined the firm in February.

The new venture will tap the experience of some DSI professionals with public-sector experience and workout experience. It also is looking to hire several additional professionals.

Brandt opened DSI more than 30 years ago, primarily to serve a client base of financially troubled private-sector enterprises in need of management, consulting, and turnaround advice. The firm has offices in Ohio, New York City, Philadelphia, Miami, New York City, San Francisco, and London.

The new venture isn’t trying to compete for basic public advisory work. Its energies are geared toward aiding those governments that are so fiscally troubled that restructuring provides the best solution.

Brandt said he doesn’t subscribe to the dire warnings of analyst Meredith Whitney about the extent of future defaults, but believes some governments are struggling with deep structural problems following the recession.

“We thought it was time to put together a dedicated unit of people with experience in municipal and governmental workouts,” Brandt said Wednesday. “There are a lot of financial advisory firms that advise on bond offerings but don’t have a restructuring background, and there are lot of restructuring firms that don’t have a municipal finance background.”

Brandt said the new unit will offer both financial and political assistance. “You have to create a narrative that makes sense to the political body and the public” to support restructuring efforts, he said.

To assist in communications, the firm will partner with Chicago-based ASGK Public Strategies.

Brandt was named by former Gov. Rod Blagojevich to lead the board of the state’s largest conduit, the Illinois Finance Authority, and he was reappointed by current Gov. Pat Quinn.

Filan was executive director of the authority for about eight months in 2008 and 2009. He was tapped as the state’s top fiscal officer in 2003 by Blagojevich — who was ousted from office in early 2009 following his arrest on corruption charges — and later elevated to chief operating officer.

Some lawmakers have blamed Filan’s budgets for Illinois’ current fiscal crisis and structural budget problems. Brandt and other supporters counter that Filan succeeded in keeping the state afloat while dealing with Blagojevich’s mandate not to raise taxes or cut education and human services spending.

“He was presented with a hard situation,” Brandt said.

Before taking the state position, Filan, a certified public accountant, worked for more than two decades at the financial advisory firm he co-owned, FPT&W Ltd.

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