28 Nov Real Estate Developer’s Bank Work Out in CT
November 28, 2011
Worth Avenue Capital, LLC of Guilford, Connecticut recently completed a 1.5 million dollar bank work out for a real estate developer in Connecticut. The developer currently maintains this loan with a commercial bank in Connecticut.
During the past year or so this developer has had a very difficult time in managing his relationship with this particular bank. As the economy has continued to deteriorate and as the real estate market remains soft, the bank had imposed additional pressure on this developer to provide more collateral to the bank to further secure its loan as well as compel the developer to pay down the principal balance of the loan in a more rapid fashion.
WAC was hired by the developer specifically to negotiate directly with the bank on the developer’s behalf with the hope that WAC would be able to alleviate some of the undue pressure that the bank was placing on the developer. After a few weeks of negotiations, WAC was able to successfully negotiate a forbearance agreement between the developer and the bank in which both sides benefited immensely. As part of the forbearance agreement, WAC was able to accomplish the following tasks for the developer:
1) The forbearance agreement carries a one year term, thus enabling the developer to “buy time” so that he can better market his property without a “fire sale” component
2) WAC convinced the bank to waive approximately 62,000 dollars in past due interest on the loan as well as approximately 50,000 dollars in outstanding legal fees that were part of the collection process
3) WAC convinced the bank to lower the interest rate on the loan, thus reducing the developer’s interest expense in the transaction
4) The forbearance agreement enabled the developer to avoid filing for Chapter 11 bankruptcy
This negotiation clearly benefited both the developer and the bank since it allowed both sides to avoid protracted litigation against one another and enabled the borrower to make his loan payments to the bank on a timely basis, allowing the bank to move this credit out of its non-performing asset category into performing status.
Please do not hesitate to call Worth Avenue Capital’s Principal, Michael Ciaburri, if your small business is in search of capital for either growth opportunities or debt restructurings. In addition, Worth Avenue Capital specializes in performing bank workouts for those same small businesses.