Top tips for financiers: dealing with a defaulting borrower
The Dentons restructuring, insolvency and bankruptcy group considers the legal, commercial and practical issues. These include the borrower breaching or being about to breach its financial covenants or overdraft limits or suddenly requesting new facilities or an extended repayment timetable. The borrower may be under increased creditor pressure (including statutory demands or other debt collection or winding-up procedures) or subject to litigation, insurance claims or rent reviews, diverting management time away from the business. Management may be unresponsive to your questions or reluctant to share information with you.
Other warning signs include the borrower: losing a key customer or supplier; suddenly losing or changing its management team, in particular the finance director; having a sudden change of auditors or trouble signing off its accounts; delivering information late; asking its bankers to send cheques for round amounts or to postpone/push forward certain payments (in particular BACS wage runs); or deferring any planned or regular capital expenditure.
Also, in the current banking climate, if a borrower with a previously good working relationship and without warning makes a spurious or unmeritorious complaint about an interest rate hedging product, it could be an attempt to draw attention away from more fundamental problems with its financial position…
Click on the link below to read the rest of the Dentons briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Dentons
News from The Lawyer
Briefings from Dentons
Compu-Finder did not have consent to send commercial emails promoting management and professional development training courses to businesses.
The maximum court fee payable will rise from £1,920 to £10,000 for all claims of £200,000 and above, and a 10 per cent discount is to be offered on all money claims made online.
Analysis from The Lawyer
Life in Canada is getting harder for firms as commodities prices fall and work volumes slow
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all