Negotiating cash for guarantors – a big win

Recently I had a client in the construction industry that had utilized various subcontractors to finish a job at a local hospital. Naturally, as he was a client of ours, he had some major issues with a secured creditor, with whom the company was in default. This particular creditor was one of the fastest moving, most aggressive that I’ve seen recently. They proved their aggressiveness by putting a hold on a massive, six-figure receivable that the hospital owed to our client, who in turn owed to several subcontractors.

In order to actually take possession of the receivable, the bank would either have to go through a lengthly (several months at the very least) legal process, or get our client to consent. This gave us leverage to work out a deal where our guarantors could actually benefit from the situation.

Essentially, we agreed to release the funds on the condition that not only the subcontractors get paid, but that the guarantors get a cut of the receivable as well. The bank, knowing that the only alternative was a lengthy, costly legal process, agreed to the terms and allowed the deal to go down. Our clients get a piece, the subcontractors get theirs, and the bank gets a slice as well. Everybody truly won.