1) The Best Workout Consultants Are Aggressive – If you think that in order to be an effective negotiator, your workout consultant needs to be aggressive and/or abrasive, think again. While I don’t wilt when challenged by a banker, I also don’t actively seek confrontation. As in life, the best way to reach a mutually agreeable resolution is to be respectful. Anyone who tries to convince you otherwise has clearly never sat on the other side of the table as a workout officer. When I was a workout officer, people who were civil to me were more likely to get the benefit of the doubt than people who gave me grief for no reason.
2) The Threat of Bankruptcy Gives You Lots of Leverage – I’ve written about this before, but it bears repeating: bankers do not tremble in fear simply because you threaten to file for bankruptcy. First, bankers know that not everyone qualifies for bankruptcy. Second, banks are required to make a decision about a settlement offer based on the borrowers ability to pay, not based on whether they’ll file for bankruptcy. Third, if you filing for bankruptcy takes a file off your workout officer’s plate, it’s usually a welcome event.
3) The Sale of Business Assets Can Fund Your Settlement – In most cases (most loans except 504 loans) the lender has a lien on the business assets. Therefore, when your business closes, liquidation of the business assets is performed in order for the bank to recover as much cash as possible. Since the bank had a lien on the assets, theses funds are NOT considered to be part of the OIC. The OIC, you see, includes the amounts of cash that you are offering above and beyond the cash obtained via business asset liquidation.