Workout loan biz takes off - Dallas Business Journal:

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“I was still doing real estatde restructurings in 1996and 1997,” Petersom said. “Then I didn’t do one untikl last month.” Following a decade of prosperityh in the real estat e andbanking realm, Peterson and others with experience workinfg out problem loan arrangements are facing a new wave of As the remaining veterans of the 1980s crash shake off the they’re finding themselves dealing with younger bankers, borrowers and advisers who’ve never renegotiated a bad “You’ve got to be creative, know the regulationsz and know pressure points — how to created leverage and how to respond to said Peterson, a Dallas attorney with Winstead PC.
“It takeds going through a few dealsand learning.” Having that or learning from it quickly, will make for a smoother ride through the current businessd downturn. Dwayne Toler represents borrowers in loanrestructuring deals. He says he can easily tell when he’s dealing with a borroweer with little experience working outloan “They’re not pragmatic,” he said. “Theyt have the attitude that every borroweewho can’t pay a loan is a bad In contrast, experienced lenders are more pragmatic and efficieng in adjusting to terms that will keep the borrowet in business and the lender in a Regardless of the experience, Toler said borroweras can gain an advantage by acting before they’re behindc on payments and before the banker comesw calling.
Borrowers should approacjh thelender “armed with information” about the where the borrower stands and some differentf scenarios for how to fix a broken loan, said co-founder and managing partner of NewSource a Dallas advisory firm focusedd on helping real estate businesses restructure thei debt. Collaboration is the key ingredient to gettin a new deal saidRobert Strong, Texas presidenf of and a former bank examiner. “Ninety-nine percent of loans where they get worked out is when the bank and borrowerdwork together,” he said.
“If they don’t see it as a mutuakl problem, it costs both parties more than it should Butcollaboration doesn’t mean the absenc of conflict. For many bankers with less thantwo experience, restructuring loans is an unfamiliarf process. And it’s many degrees more stressful than saying to most of the proposalw that come acrosstheir “The banks are going to be undedr pressure to find people with the skilkl sets (to handle restructuring work),” Strong said. “Some of the banker s who are lending money today havethe aptitude, but don’ have the skills.
” For the last 10 years, making bank loanse has been heavy on the customer service and light on collections. In addition to very littler work on the restructuring andworkoutt side, banks became comfortable with a secondary market for the loansz they originated, said Kent a principal in , a Dallas investment bank that specializesw in distressed situations. “The banks were of the mind-setr that when a deal got too risku they could trade out of he said. “No one would expecty that the secondary market would completelgyshut down.
” But with no outside options and the banksz themselves dealing with serious capital bankers are more frequently sitting down with clients for the “uncomfortabls conversation.” “Really good workout lenders are trainerd to say ‘No,’ (trained) how to grab for more collaterap and (trained to) make thingas punitive on the borrower. It takesx a special individual to do Laber said. “It’s the kind of conversation that the businesw developmentpeople don’t want to have.” There’x nothing fun about workout negotiations, said Strong, who began his financial careert repossessing cars in Fort Worth.
But the experiencr ultimately will mean a more seasoned generationof “It can be a real difficulty position to go from customer relations to but it’s real-life bankingf — you’ve got to collect what you Strong said.