Financial executive for over two decades, Aubrey Gladstone is the president of Gladstone Consulting, Inc., along with Marianne Gladstone, professional liaison, offer problem resolution services to businesses across the United States. From offices in Boca Raton, Florida and Pittsburgh, Pennsylvania, Aubrey Gladstone has steered more than $100 million in business workouts, solving problems for dozens of American businesses.
Workout agreements are structured among owners, lenders and creditors to renegotiate terms on loans that are technically in default. The new negotiations may change the interest rate on the loan, the repayment period, monthly installments, and resolved other loan covenants.
Workout agreements benefit lenders, creditors and perhaps more so, the business owners and their employees. In the process, businesses can adjust financial liability through modified loan terms, while lenders are more likely to avoid substantial losses and save the added expenses associated with recovery and foreclosure.
A successful workout is dependent on convincing the lender of two things: that the company can ultimately reduce its debts and that the workout agreement is the lender’s best route to recovery. In this regard, it is far better to approach the lender first for a workout agreement, rather than defaulting on payment or waiting for the lender to send demand letters. Delay reflects badly on financial responsibility and can endanger any future success.
Contact the lender first and present an honest and sound financial recovery plan that identifies the company’s current problems, solutions to these problems, an implementation strategy, a timeline for implementation, and fiscal projections for both the short term and long term. The plan should also include proposed new loan terms and ideas to streamline operational and financial efficiencies. A timely and well planned proposal may ultimately win the lender’s trust and save your company from liquidation.
Workout agreements are structured among owners, lenders and creditors to renegotiate terms on loans that are technically in default. The new negotiations may change the interest rate on the loan, the repayment period, monthly installments, and resolved other loan covenants.
Workout agreements benefit lenders, creditors and perhaps more so, the business owners and their employees. In the process, businesses can adjust financial liability through modified loan terms, while lenders are more likely to avoid substantial losses and save the added expenses associated with recovery and foreclosure.
A successful workout is dependent on convincing the lender of two things: that the company can ultimately reduce its debts and that the workout agreement is the lender’s best route to recovery. In this regard, it is far better to approach the lender first for a workout agreement, rather than defaulting on payment or waiting for the lender to send demand letters. Delay reflects badly on financial responsibility and can endanger any future success.
Contact the lender first and present an honest and sound financial recovery plan that identifies the company’s current problems, solutions to these problems, an implementation strategy, a timeline for implementation, and fiscal projections for both the short term and long term. The plan should also include proposed new loan terms and ideas to streamline operational and financial efficiencies. A timely and well planned proposal may ultimately win the lender’s trust and save your company from liquidation.
