Panel: On Workouts, Information Is Key

NEW YORK CITY-Information is king when it comes to the workouts that lenders increasingly find themselves doing, a panel of experts told a Mortgage Bankers Association of New York gathering Thursday. Acknowledging that a symposium of several days could be devoted to discussing the intricacies of workouts, the panelists offered quick tips and emphasized the need to understand the parameters of each individual situation that calls for a restructuring.

“Don’t assume the guarantee says what you think it says,” warned moderator Joshua Stein, a partner at Latham & Watkins LLP. In particular, Stein told the audience of lenders, “there are all kinds of surprises and weird interactions in partial guarantees.”

Nor should a borrower’s claim of distress be taken at face value, Stein said, advising the audience to examine the borrower’s entire balance sheet rather than focusing solely on the distressed loan. “The stronger the guarantor, the weaker his position is” in negotiating, he said.