The pandemic has hit all businesses hard, causing an increase in business failures, bankruptcies and restructurings. As companies default under their credit agreements, lenders have to decide what course of action is appropriate to effectuate their goals. Should the lender give the borrower breathing room by entering into a forbearance agreement in exchange for certain milestones, or is more aggressive enforcement action required?
One potential strategy may be to execute a strict foreclosure, which is often a less expensive and faster option than pursuing a bankruptcy process. We have prepared a compendium of recent Chapman client alerts entitled "Strictly Speaking: What Lenders Need to Know About Strict Foreclosure and Restructurings," which includes contributions from Carl Marks Advisors, to explain the process and highlight many issues relating to effectuating the Strict Foreclosure Strategy.