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March 2004


Vol. 2 No. 3
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ABF Journal, March 2004
March 2004
Troubled Companies…
Delicate & Decisive Actions

Crossing the River Styx: Guiding a Lender through a Bankruptcy

By Howard Brod Brownstein

Lenders facing the threat of a borrower’s bankruptcy should engage qualified guides. Bankruptcy advisors can help you evaluate your risks and manage them, and guide you into, through, and out of a bankruptcy proceeding.
(Ref # BANK005)

Bankruptcy Financing in 2004… 

Alternative Sources, Flexible Structures Shape Market Activity
By James Hogan

Among the emerging trends in bankruptcy financing will be new and more flexible financing structures that should help move many distressed situations to resolution more expeditiously. The financing side also will see the continuing entry of new and aggressive players who are intensely focused on the compelling value often found beneath the surface of a company in distress.
(Ref # BANK006)

Of Lenders & Workouts: Moving from Defense to Offense
By Daniel F. Dooley

Although the lending environment has only loosened up moderately in the last two quarters, one can almost feel the pressure starting to increase “to grow that portfolio.” The big questions remain: Will we repeat the sins of past? And, what should be the lessons learned? (Ref # IND047)

Failing Credits: Minimizing Surprises & Maximizing Value
By Ken Frieze

A lack of aggressive collateral monitoring can wrongly lead lenders to believe asset recovery values will fully cover their outstanding loan. In order to minimize exposure to losses, lenders must understand both the warning signs of a failing credit and the necessary steps to maximize value should the disposition of assets become necessary. (Ref # CRD014)

Managing Cross-Border Bankruptcy: Opportunity or Landmine?
By Seth R. Freeman

The rapid globalization of business raises important new issues for both small and large U.S. asset-based lenders and service providers to the ABL industry. The purpose of this article is to provide some ideas on how ABL lenders and investors can position their activities to take advantage of global business opportunities and how to respond to trouble, including a cross-border insolvency situation. (Ref # BANK007)

Corporate Governance: Averting Crisises Before They Happen
By Diedrich Von Soosten, CTP, NACD

A sharp rise in the restatement of financial reports has placed a fresh spotlight on the role of audit committees and their responsibility in heading off and averting corporate crises. One thing for certain is that they can no longer accept at face value what has been presented to them. Rather they must now be equipped to ask the right questions and go beneath the surface to fully grasp their company’s true state of health. (Ref # GEN004)

Columns

A PROFILE OF SUCCESS
A Profile of Success: Champion of the Team Approach
A Profile of Jay A. Craig, President & CEO, GMAC Commercial Finance; Vice President, General Motors Acceptance Corp.

Staying out of the spotlight is what Jay Craig prefers, but when you’re heading up GMAC Commercial Finance, one of the world’s premier commercial lending companies, that’s not so easy to do. In this profile, Craig talks about his “team” approach to business success. (Ref # EXEC014)

LEGAL EYES
Deepening Insolvency: A Concern for Secured Lenders in Bankruptcy
By Rudolph J. Di Massa, Jr., and Jacqueline B. Penrod

Extending credit to a deeply troubled borrower may involve more than just repayment risk as the tort of deepening insolvency might be asserted by unsecured creditors seeking to hold lenders responsible for the reduced value of the borrower’s assets. Therefore, lenders must be careful to avoid any appearance that they are supporting a moribund business solely to shore up their own collateral and cash flow needs, at the expense of the borrower’s other creditors. (Ref # LGL028)

TURNAROUND CORNER
Retaining Troubled Borrowers Through Proactive Management
By Lee A. Diercks

According to the “institutional memory hypothesis,” banks ease their credit standards as the occurrence of their last loan write-off fades deeper into history. This considered, how do lenders avoid some of the historical and cyclical traps they typically encounter, but continue to drive consistent growth? According to a number of lenders, the key to solid performance during the coming year lies in retaining existing customers without incurring more risk and attracting new clients without lowering credit standards. (Ref # TM023)

FACTORING FOCUS
Hybrid Factoring: The Next Generation
By Randy Applegate

The changes we’ve experienced the last few years in the marketplace is now demanding a new hybrid way of funding receivables. (Ref # FAC033)

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