Keeping Your Banker Happy During A Workout Scenario Is Not About Doing What They Want.
I speak with many borrowers in default (and their attorneys) who start the conversation with, “I do not want to piss the banker off…”
It is, to a degree, a valid point—we never want to piss off the lenders. It serves no purpose. However, it’s an interesting concept that requires additional consideration to be appropriately and successfully achieved in a workout but what does this really mean and how do we implement such a strategy successfully from a workout point of view? First of all, please understand that the bank simply wants to collect their debt service payments. Thus the only way to really keep the banker/lender happy is to pay, pay, pay. If that were possible, you wouldn’t be in default.
So, let’s all understand that if the only way to really keep your banker/lender happy is to pay them, then you will eventually have an unhappy lender as this is an impossible feat in your current situation. Stop trying to make your banker happy; that is not the goal. Also, keep in mind that the bankers get much traction out of using emotional threats about the need for you to pay current, and will act very upset with you if you fail. In most cases, it works for them so it is a common tactic to use with a defaulting borrower. Do not fall victim to this ploy.
When we get involved, we communicate to the bank with complete clarity that payment is impossible and that we will act responsibly and professionally with full disclosure of all pertinent financial information and full cooperation in anything else the bank reasonably requires. We work together with the bank to yield the best results as soon as possible as we are committed to doing what is right, appropriate and required. In short, we keep the banker happy and satisfied with our cooperation in the orderly workout of the matter. This works. It may not be as good as outright payment but it runs a close second. Our full cooperation and leadership in resolving the issues results in the creation of a quality working relationship with the banker that supports the entire workout scenario. In many cases, the defaulting borrower even remains the “bad guy” in the eye of the lender while we take on the persona of the “good guy” and it all works out.
Thus, not pissing off the banker, or better yet letting us keep them happy, diverts the attention from making debt service payments that are impossible to cooperation in the workout process which works very well for all involved.
