An interesting recent Reuters article, titled 'Lenders More Willing To Own Bankrupt Firms', documents a fairly significant change in the distressed and bankrupt marketplace. Lenders, it reports, are no longer selling their delinquent and troubled loans. They are not selling the loans at steep discounts. They are converting loans to equity ownership and managing the companies themselves.
Reportedly lenders are “kicking the proverbial can down the street" by granting waivers. They are no longer forcing companies to default, or marking loans to market. This is quite unusual, as compared to prior practice.
Will this continue? Once the economy improves, will lenders focus on lending money? Or will lenders continue to be owners and manage the operating companies? Or will they return to selling troubled loans?
AUTHOR
- Robert Amter
- Chief Executive Officer and Adviser to distressed turnarounds and profitable manufacturing and service companies since 1991. Clients: Bank of New York, General Electric, Morgan Stanley. CEO assignments have included Evenflo Company and Ladish Co. Prior to 1991 was a 15 year veteran of $20 billion Emerson Electric Co. as a division president. Lecturer at New York University's Graduate School of Business. A more complete description can be found on the web site: https://www.bobamter.com
