Regulatory update: the successful work-out

The successful work-out involves one part psychology one part working together to resolve the problem issues, and reaching a result that may not be completely comfortable for the lender or the borrower. The successful work-out most commonly revolves around collateral that still has value, a borrower with a good business that is down, or guarantors with the wherewithal to invest in the business or see it through the difficult times. Borrowers allege that the reason they are in default was because of the lender's respective actions: not lending additional funds, not renewing the loan, transferring them to special assets -- to name a few The psychology of these allegations initially causes the lender to reconsider whether they want to continue with the borrower. In retrospect, there are many reasons for the lender and borrower to desire a work-out over otherwise draconian emedies, particularly when the fall in collateral value or the borrower's business may be temporary or solvable over a period of time.