The fox, your banker, is in the hen house… again and you opened the gate and invited him.

I can’t believe it, or actually I can believe it, as it happens every day, despite my many warnings, even a few of my own clients are occasionally guilty of abandoning the plan and becoming a disciple of the bank.

Here is what I see, and while I have warned you all before, until this self destructive practice stops  I must continue to warn you as ignoring this can be fatal to your business workout.

1. The bank workout department is a liquidation department. Its goals are to extract as much capital  as they can, until they have sucked the lifeblood out and then they foreclose and mop up the mess, liquidating  whatever remains, leaving you the borrower ‘on the street’ without anything left.

That’s their thank you for being a good customer and working with their workout department…the liquidators.

2. Along the way they may extract more cash then you can afford,  killing any chance of a turnaround, obtain additional collateral, and additional guaranties, all in the name of the workout aka the liquidation process.

3. You hear them say they believe you are worth saving and they want to do business with you, that you are their kind of business man, and if we all work together we will get out of this mess…together!

AND YOU BELIEVE THEM?

Yes you do, because for the most part we are all wanting to cooperate, you all feel very responsible for the mess you are in and you all want to honor your word and pay back the loan even if the circumstances have changed dramatically and you  cannot afford it, do not have the resources to accomplish the workout and are throwing yourselves on the banks sword so they can extract more cash.  You  believe you have embarked on the honorable and correct path, despite the self destruction.

Are you nuts?

It’s a war. The banks against the borrowers and their job is to intimidate you into cooperating with their liquidation plan.

Your job is to run as fast as you can from therm, in the other direction and batten down the hatches as you fight for a workout that works for you, not just the bank.

The only answer is debt reduction, not modification which is another word for financial  death.

You may modify it any way you want,  but in  the end it is the debt that will kill you, not the reduction of revenues, but the debt that will eat you and your organization.

Will the bank give you more working capital? No.

Will the bank reduce your principle? No.

They will reduce interest and defer payments till later, oh boy, keeping you barely alive while they collect more from you now.

What a deal.

Until we become emotionally self sufficient, and therefore capable and prepared to thwart the banks insistence that ‘we work it out with their workout department’, until we understand that this is the fox inviting himself into your hen house  to eat your chickens, until you understand this and gain the strength to stand on your own feet, look the banker in the eyes and tell him thank you but unless you are willing to work towards solving the problem then no thank you start the foreclosure process now.   Then  call me for help.

413-584-2581. Norm will arrange a no obligation tele-conference for us to discuss your options.