Workout loan biz takes off - Dallas Business Journal:

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“I was still doing real estate restructurings in 1996and 1997,” Peterson said. “Then I didn’ do one until last month.” Following a decade of prosperithy in the real estate andbankingf realm, Peterson and others with experience working out problen loan arrangements are facing a new wave of workouts. As the remaininyg veterans of the 1980s crash shake offthe they’re finding themselves dealing with younger borrowers and advisers who’vd never renegotiated a bad loan.
“You’ve got to be know the regulations and know pressure points how to create leverage and how to respondsto leverage,” said Peterson, a Dallaz attorney with Winstead PC. “It takes goin g through a few dealzand learning.” Having that experience, or learning from it quickly, will make for a smoothed ride through the current business Dwayne Toler represents borrowers in loan restructuring He says he can easily tell when he’s dealinbg with a borrower with little experiencw working out loan deals. “They’rr not pragmatic,” he said. “They have the attitude that every borrowerewho can’t pay a loan is a bad guy.
” In experienced lenders are more pragmatic and efficient in adjustinh to terms that will keep the borrower in businessz and the lender in a loan. Regardlessw of the experience, Toler said borrowers can gain an advantaged by actingbefore they’res behind on payments and before the bankere comes calling. Borrowers should approach the lender “armed with about the market, where the borrower standds and some different scenarios for how to fix abrokenh loan, said Toler, co-founder and managing partner of NewSource a Dallas advisory firm focused on helping real estatd businesses restructure their debt.
Collaboration is the key ingredienf to getting a newdeal struck, said Robert Texas president of and a former bank examiner. “Ninety-nine percenft of loans where they get worked out is when the bank and borroweework together,” he said. “Ic they don’t see it as a mutual problem, it coste both parties more than itshould have.” But collaboratiohn doesn’t mean the absence of For many bankers with less than two experience, restructuring loans is an unfamiliar process. And it’s many degrees more stressful thansayinf “yes” to most of the proposals that come acrosas their desks.
“The banks are going to be undefr pressure to find peopld with the skillsets (to handles restructuring work),” Strong said. “Somre of the bankers who are lendint money today havethe aptitude, but don’ty have the skills.” For the last 10 making bank loans has been heavy on the customeer service and light on collections. In addition to very littlre work on the restructuring and workout banks became comfortable with a secondaruy market for the loansthey originated, said Kent a principal in , a Dallas investment bank that specializews in distressed situations. “The banksx were of the mind-set that when a deal got too riskyu they could trade out of he said.
“No one would expect that the secondaru market would completely shut But with no outside optionx and the banks themselves dealing with seriouscapitap constraints, bankers are more frequently sittin down with clients for the “uncomfortable conversation.” “Reall y good workout lenders are traines to say ‘No,’ (trained) how to grab for more collateraol and (trained to) make thingsa punitive on the borrower. It takes a special individuakl todo that,” Laber said. “It’s the kind of conversationb that the business developmentpeople don’yt want to have.
” There’s nothing fun about workout negotiations, said Strong, who began his financialo career repossessing cars in Fort But the experience ultimately will mean a more seasoned generationn of bankers. “It can be a real difficult positionb to go from customer relationsdto collections, but it’s real-life banking you’ve got to collect what you make,” Stronvg said.