Pre-Bankruptcy Planning for Troubled Loans: Workout Strategies for Maximizing Recovery

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Thursday, January 25, 2018

Recorded event now available

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Course Materials

This CLE course will provide guidance to commercial lenders and their counsel on approaches for confronting a defaulted or troubled loan. The panel will discuss workout options and outline steps for lenders when anticipating a borrower’s bankruptcy.


About 38,000 U.S. businesses filed for bankruptcy in calendar year 2017, about on par with 2016. To maximize recovery of distressed loans, lenders must evaluate outstanding loans for the first sign of trouble and prepare with pre-bankruptcy tactics to protect the lender’s rights and interests.

Each borrower’s circumstances are unique, so lenders can’t formulate a uniform recovery strategy with all borrowers. Our panel will review and discuss best practices for loan workouts and when bankruptcy looms.

Listen as our panel of finance attorneys explains steps commercial lenders should take when confronting a troubled loan and effective pre-bankruptcy planning strategies.



  1. Triage for financially distressed companies: A secured lender's perspective
    1. Examine documentation and collateral perfection
    2. Audit inventory, accounts receivable and equipment to determine borrowing base issues
    3. Review cash flow budgets and projections at least monthly
    4. Head in the sand
    5. Retention of experienced workout consultants
  2. Documenting a workout solution
    1. Obtain guarantees, letters of credit, other credit support
    2. Forbearance agreements
    3. Reservation of rights
    4. Resolving preference issues
  3. Pre-bankruptcy strategies
    1. Collateral sales options
    2. Alternatives of a debtor
    3. Actions in workouts that lead to potential preference issues
    4. Tight drafting of intercreditor agreements and agreements among lenders for enforcement in bankruptcy cases
    5. Relaxing financial covenants
    6. Avoiding “course of dealing” issues


The panel will review these and other key issues:

  • What are a lender’s options when dealing with a commercial borrower on the verge of default?
  • What are some strategies and tactics lenders may employ to maximize recovery of the loan principal pre-bankruptcy?
  • How can lenders minimize liability concerns stemming from “course of dealing” issues?


Dickey, Allen
Allen J. Dickey


Mr. Dickey practices in all aspects of real estate finance, securitization, acquisition, leasing and development. He...  |  Read More

Lipke, Douglas
Douglas J. Lipke

Vedder Price

Mr. Lipke is Co-Chair of the firm’s Insolvency, Bankruptcy and Corporate Reorganization Group. He concentrates...  |  Read More

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