I hope you enjoy this month’s Journal of Corporate Renewal, focused on the best bank loan workouts. I have been involved in over 400 problem loan workouts with some of the top workout professionals in our industry, including workouts with several banks. As many of you know, every problem situation involves unique people and circumstances. The challenges for bank lenders and the workout professionals that assist us are always the same—stay cool under pressure, analyze the situation, and then find the best way to maximize recovery for the bank.
The articles in this issue are written by top turnaround professionals. It has been my pleasure to work with and learn from them.
Robert B. Kaplan, from Jeffer Mangels, writes about a worst-case scenario with a litigious borrower. The workout strategy, using a receivership sale of property, resulted in full repayment for the lender, despite numerous unforeseen challenges from the struggling borrower.
Hugh Larrett-Smith, from Trimingham Associates, and Rick Hyman, with Crowell & Moring, examine several troubled companies that utilized “rocket” Chapter 11 bankruptcy cases with expedited confirmations, which resulted in greater recoveries and successful outcomes for lenders.
Jeff Brandlin, from Brandlin & Associates, writes about a restructure of the largest concrete pumping company in the United States. With his help and the bank’s perseverance, this company restructured its loans, performed well as the economy improved, and was ultimately sold for a substantial gain. This workout is considered the greatest in the history of Wells Fargo Bank.
Carrie Lee, with Umpqua Bank, and Todd J. Dressel, from McGuire Woods, write about a factoring company that filed a “free fall” bankruptcy without advance warning to the lender. With the help of top-notch professionals and close oversight by the agent bank, lenders were paid in full within 60 days of the filing.
Patrick McCutcheon, from Umpqua Bank, and Tara Schleicher, from Foster Garvey, write about a company that designs and manufactures reusable containers for military equipment. Management and owners filed lawsuits against each other, but the lender found a way to exert the right amount of pressure to produce the desired exit.
David Stapleton and Jake DiIorio, both with Stapleton Group, detail a case study with a travel industry company on the brink of death due to the sudden onset of the COVID-19 pandemic after a private equity sponsor refused to inject more capital. The lender pushed for retention of a CRO, who successfully turned around the business, resulting in full repayment for the lender and significant return for the sponsor.
Craig Weller, a former workout officer with Wells Fargo Bank, highlights a relatively rare situation, where company management heeds the wake-up call, successfully turns itself around, and transfers back to the originating lending group.
While each deal presents unique challenges, the best bank workouts include the best lawyers and consultants providing their best advice to bank lenders. These workouts also involve bank senior management and credit executives who understand the pros and cons of bank/borrower relationships.
Experience, creativity, and good luck are all critical for a successful workout.
