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Preventing Default Through Business Loan Modification

Only few people benefit when a business loan goes into default — just ask the borrower, lender or creditor. For those who want their businesses to avoid litigation or corporate bankruptcy, alternatives do exist. One of the most common is known as a loan workout or loan modification agreement.

At the Chicago-based business law firm Jordan & Zito, our loan modification attorneys have more than 25 years’ experience in negotiating, drafting and implementing workouts. Because we represent a variety of businesses, lenders and borrowers nationwide, we are in a unique position to find debt restructuring workout solutions for our clients.

Using A Loan Workout To Restructure Debt

A loan workout is a loan modification agreement that is acceptable to both the borrower and the lender. Often the business borrower is suffering temporary financial problems or a setback and would benefit from debt restructuring.

Terminology often used in modified loan agreements include:

  • Payment amount. Parties often agree to temporarily decrease or suspend the monthly payment in return for an increased payment in the future.
  • Payment dates. In return for increasing future payments and extending the payback period, lenders may temporarily suspend payment dates.
  • Maturity date. Lenders may allow the date when full payment is due to be push back.
  • Interest rate changes. The loan’s interest rate may be reduced.
  • Sale of property. To avoid foreclosure, the terms of a loan workout may include the sale of a property.

Drafting And Negotiating A Loan Workout

In a loan modification agreement, the attorney plays a pivotal role in ensuring that the workout does not end up creating more legal problems than it solves.

A borrower experiencing financial difficulties should contact a loan modification attorney quickly rather than waiting for the problem to escalate. An experienced workout attorney will analyze the borrower’s financial position, then recommend a workout strategy based on the information.

If bankruptcy is the only solution that makes sense, negotiating a loan modification requires avoiding legal traps and understanding the complexities of dealing with lenders. Inexperienced attorneys often fall down when trying to avoid so-called preference problems; giving one creditor better terms at the expense of other creditors. They may also be unaware of filings required by the Uniform Commercial Code. An experienced attorney is invaluable in successfully navigating the loan modification process.

Contact Jordan & Zito For Assistance With A Loan Workout

At Jordan & Zito, we help clients across the United States resolve their business disputes and financial problems. As a boutique business law firm, we find creative solutions using strategic insights gleaned from years of experience. Our limited conflicts of interest give us the flexibility to represent businesses that many other law firms cannot handle.

To find out how Jordan & Zito can help you with a workout or loan modification agreement, call our offices in Chicago at 312-489-8174 or contact the firm by email.