How to Work Out Your Distressed Loan

by Shlomo Chopp, Managing Partner

Here’s how to work out your distressed loan.

- Re-underwrite your property. Know what it’s worth.
- Get your documents and financials in order.
- Review your loan documents with a fine tooth comb.
- Get your operations in order to comply with the loan.
- Identify defaults (also past) and consult with counsel.
- Consult with multiple market leasing brokers.
- Consult with multiple market sales brokers.
- Do not engage in appraiser. It’s a waste of time.
- Identify why the lender may assume a higher value.
- Prove out all your assumptions.
- Develop multiple proformas to test out valuations.
- Overlay various debt restructure scenarios.
- Write up a restructuring memo.
- Drive home the key points that support your analysis.
- Be courteous to the asset manager.
- Educate the Lender.
- Be transparent (with counsels guidance).
- Have flexibility.
- Be patient and never lose your stamina.
- Don’t overestimate your leverage.
- Don’t be over-sensitive.
- Be intellectually honest with yourself.
- Don’t take advice from friends who don’t know.