Your borrower has defaulted: When do you pull the trigger?
July 11, 2016
Published in Real Estate Capital, William Schwartz, partner in Levenfeld Pearlstein's Banking & Restructuring Group, concentrates his practice on representing borrowers and lenders in financial services, litigation (including bankruptcy) and workouts.
The bridge loan you made to that great borrower nine months ago has defaulted. The borrower says it is just a temporary glitch, but you are now faced with a decision: Do you pull the trigger and exercise your remedies, or do you work with the borrower to see if the ship can be righted?
If you are an active private money lender and have never been in this position, you are either very lucky or you are deluding yourself (and have the holes in your bank account to prove it). For those who are willing to admit that they have made a bad loan, it’s time to face the music and figure out what to do next.
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