Commercial Loan Workouts and Litigation

Using debt to start, build, and sustain a business is an essential component of the American economy, from the Fortune 500 company to the restaurant down the street. When investment opportunites arise, businesspeople use debt to pursue them and leverage returns. Although most loans get repaid, sometimes even the most diligently drafted pro formas just don't pan out. Cash runs short, payments get missed, and the dreaded certified mail from the bank arrives.

Even at normal debt levels, very few businesses have the ability to pay off their entire loan balance on a ten-day demand, and when they can't, a sheriff's deputy carrying a lawsuit will soon be at the door. The business and the individual owners who guaranteed the loan all get sued. It's a nightmare scenario for any business owner, and it must be dealt with immediately and aggressively when it materializes. As is the case with most problems, a loan in default does not go away simply because you ignore it. 

Our Experience

Since 2009, the lawyers at Johnson Marlowe LLP have successfully resolved tens of millions of dollars worth of defaulted, personally guaranteed commercial loans. Our work includes pre-litigation workouts and negotiation and defense of lawsuits on promissory notes and guarantees. While every case is different, we've repeatedly been able to help our clients avoid threatened litigation and to resolve litigation that has been filed without the necessity of a bankruptcy filing.

We've helped our clients dispose of distressed assets--from vacant residential lots to medical office buildings to jet aircraft--and refinance debt on them. Our lawyers talk candidly with lenders and help focus them on practical concerns; why it is better to cooperate with our clients than to go after them. We are one of the few firms in Georgia that has a sophisticated borrower-side workout practice, and we've successfully resolved claims by both the smallest community banks and the largest banks in the world.  

In our commercial loan workout practice, we've successfully used the following outside-the-box structures:

  1. Distressed asset short sales;
  2. Deeds in lieu of foreclosure;
  3. Interest and payment term modifications;
  4. Payment reduction arrangements to avoid default; 
  5. Lump-sum settlement workouts; 
  6. Controlled consent judgments coupled with forebearance agreements. 

And in some bank-filed lawsuits, we've used cutting edge defenses under the Georgia confirmation statute, the Equal Credit Opportunities Act, and the implied covenant of good faith and fair dealing to put pressure on lenders and obtain better settlement terms for our clients.    

Working out a commercial loan involves complex calculations of economic ability, cost, and benefit, and the legal lay of the land is often complicated. If you are facing personal financial ruin in the form of a bank demand letter or lawsuit, we can help. Contact us today.