The use of the term material adverse effect within asset-based lending agreements has a long history. Jaime Rachel Koff and Lon M. Singer provide an introduction to the term and how it was originally used and then take us through more recent history and how its use has changed, particularly during the COVID-19 pandemic.
Identifying long-term business problems is difficult to do during times of economic upheaval. Keith Chulumovich of O’Keefe outlines which factors to evaluate and the trends to keep an eye on when determining how dire a company’s situation really is.
Chapter 11 bankruptcy is a complicated process and having as much information as possible is necessary to ensure a smooth journey. As bankruptcy activity may pick up in the second half of 2021, companies and their lenders may need the services of a forensic accountant to objectively evaluate any potential issues within a company’s financial records.
In a Q&A with ABF Journal, Dwayne L. Hyzak of Main Street Capital discusses private equity’s evolving relationship with asset-based lending and how an increase in direct lending activity and combination financing with debt and equity is changing the commercial lending landscape overall.
Metal commodities are soaring to record highs in 2021 as supply chain issues threaten to hinder a solid rebound from economic contraction in 2020. A similar recovery is taking place for asset-based lending to metal service centers.
The COVID-19 pandemic is historically unprecedented, but its effects on the financial world are not wholly unique. Hugh Larratt-Smith uses the turn of the 20th century as a historical parallel and speaks with several prominent members of the asset-based lending community to get their thoughts on how the market will develop during the second half of 2021 as the pandemic (hopefully) recedes.
As the healthcare sector continues to be an attractive arena for lenders, it’s important to remember that special care must be taken to close deals efficiently in this space. Stacy Hopkins of Paul Hastings urges lenders to perform specialized due diligence early in the loan lifecycle to ensure healthcare lending deals get done.
Many aspects of the asset-based lending process had to be drastically changed due to the working conditions spurred by the COVID-19 pandemic, but no area was as challenged as the work of field examiners. Donald F. Clarke of Asset Based Lending Consultants explains how field exams were conducted during the COVID-19 pandemic and how they might look in a post-pandemic world.