Your Loan has Been Assigned to Special Assets...What Now?
There is a whole discipline around the process of turning a company around, which is outside the scope of this article. Examples of changes needed to restore a business to profitability include staff cutbacks, reduction in physical plant, renegotiating your loans and trade debt, salary and benefit reductions, restructuring both inside and outside of bankruptcy, and a sale of the business to a stronger entity. Each one of these steps has a cost and a benefit that should be carefully considered and quantified before inclusion in the company’s plan presented to the bank.
Remember that the bank has placed your company into Special Assets because it was concerned that the company will be unable to meet its obligations, especially its debt to the bank. The bank’s primary goal at this point is to recover as much as possible from the company, recognize its losses if any, and move on.
It’s likely that the bank has reached the point of “lender fatigue," and no matter how well your turnaround plan succeeds, the bank will not be eager to maintain your company as a customer. Do not wait for your bank to pull the plug on your loan and leave the company without sufficient working capital to operate.
Concurrent with everything else that the company needs to do when in crisis mode, management should begin a search for replacement financing immediately. The company may be able to move up the “risk ladder” to a lender that specializes in turnarounds or is more understanding of the ups and down of the printing industry. PI
Mark R. Hahn is a managing director of Brownstein Corp., a nationally recognized firm providing turnaround and advisory services to companies and their stakeholders, as well as investment banking services—including sale and refinancing of businesses, investigations and fiduciary, litigation and valuation services.
Mark Hahn is a managing director and founder of Graphic Arts Advisors, a boutique strategic financial advisory and consulting firm focused exclusively on the printing, packaging, mailing, marketing services, brand management, and related graphic communications industries. With more than 35 years of graphic communications experience in the areas of finance, operations, sales, M&A, and general management, Hahn has served as chief financial officer, chief operating officer and other senior positions with several commercial printing companies, as well as founding and eventually selling his own printing company.
The firm assists company owners and management, as well as their lenders, investors and shareholders in the following areas: mergers and acquisitions, sale of business, strategic and financial advisory, capital structure and funding, financial analysis, interim and turnaround C-level management, business valuations and serving as consulting experts. Hahn is the author of The Target Report and is regularly published and quoted in printing industry trade and management journals.
Mark Hahn can be reached at (973) 588-7399 or firstname.lastname@example.org