Category: Published Articles

The True Face of Dilution (Part 1 of 3)

Field examiners may spend a considerable time scrubbing a borrower’s trade accounts receivable (A/R). Often the resulting ineligibles proposed are met with the following question “Isn’t this all covered by dilution?” Knowing the answer to the question is critical to ensuring that the borrowing base formula adequately protects an asset-based lender.

Do Quick-and-Easy Section 363 Sales Always Yield the Best Return on Collateral?

Because legal fees and other costs can stack up during a lengthy Chapter 11 reorganization, some asset-based lenders might welcome the trend toward §363 sales, reasoning that quicker sales ultimately will translate into maximum return on collateral. In reality, however, §363 is anything but a one-size-fits-all solution.

Balancing Opportunity and Risk

This year promises to be among the most challenging in memory for asset-based lenders. More than at any other time, lenders will face competing pressures to open up the spigot to meet pent up market demand for financing, while simultaneously confronting internal and external pressures to limit exposure and risk. Adding to the impetus is the recent White House initiative to leverage banks into aiding small businesses through increased lending.