Dear Banker, Why Doesn’t Anyone Survive Your Workout Department?

Dear Banker,

We all know the truth. Almost no business survives your Workout Department. Why not either acknowledge that the Workout Department (or Special Assets Department, as it is frequently called) is really a liquidation department, as that is apparently the goal. It appears you believe that if you mislead the defaulting borrower, pretending that a bank-run workout is anything other than a plan to extract additional payment at the cost of liquidating the business, it will yield the highest return for the bank.

Wouldn’t a better plan be to actually support a turnaround effort in an attempt to create long-term success? The bank could still control the effort, making sure certain assets and resources were properly being directed and not diverted and outside turnaround specialists could be effectively utilized, protecting the bank from lender liability exposure. A better result can be realized that is in everyone’s best interests. An effective, productive turnaround process that gives the defaulting borrower an opportunity to rebuild and simultaneously protects the bank’s position is in everyone’s best interest.

This result can be achieved; it is practical and realistic. But first, we all have to break down the artificial barriers between the defaulting borrowers and the self-serving bankers and reach the conclusion that everyone’s best interests are served if we work together for the classic win-win result.

Why not?