When Buyers Change Their Minds

By John Hyde, Managing Director, Special Situations, Graphic Arts Advisors

We changed our minds. Those were the words that came in an email to one of our clients, an owner of a treading water printing company that had just signed a letter of intent. The seller, our client, was all excited to come out of the Thanksgiving holiday with an opportunity to move from a letter of intent to a formal contract and a closing, when they suddenly received an email from their buyer: “We changed our minds.”

Ouch. So, what does that mean for other owners considering selling their businesses? Or owners who are thinking of buying another company? What is instructive from this communication? There are several takeaways. 

Timing of Information

One relevant element is the timing of when this information was provided to the seller. Was it right before the closing, after all the time and money and effort invested in legal, financial, and operational details, or was it before? The heavy lifting takes place between the letter of intent and the formal closing. Thankfully, in this situation, it was before all the effort that would go into getting from the letter of intent to the closing.

What Changed Their Mind

There are a number of reasons a buyer may change their mind. Could it be that there was something about the seller that the buyer got spooked by? In this case, the answer was clearly no. In other cases, the disclosures create a set of facts that can make the buyer kind of nervous, revealing things they didn't expect. Or maybe the information is not as clear as they had hoped.

Disclosures can also shed light on some potential problems involving a seller’s customers and their profitability. The problems could be coming out regarding employee issues, or maybe there's something that involves operational matters that the buyer is having cold feet about before they go all the way into the relationship through a formal closing.

Who Knew About the Sale

Keeping early-day conversations and intentions close when selling your business is key. One scenario that could be harmful during and after a transaction is complete is whether any “other parties” knew about the desire to sell too early.

Did the employees know? Did the customers know? Did the suppliers catch wind? Thankfully, in this case, none of those constituencies was aware of a letter of intent, and the business owner had a strong desire to sell their business. If so, this could have had incredible ramifications on the existing business, especially had the buyer backed out later in the process! 

So those magic words, “we changed our minds,” resulted in a really tough day for one of our clients. In this case, the business is still viable for sale thanks to decisions made by the seller and working alongside the advisors to assist in managing information and interactions. 

I encourage all who consider entering a merger or acquisition transaction to be mindful that often things don’t go as planned. 

John Hyde has more than 30 years as one of the leading consultants to the printing, mailing and graphics communications industries in the areas of mergers and acquisitions, non-bankruptcy debt restructuring, and orderly wind-down of assets and liabilities. Connect with GAA at www.graphicartsadvisors.com

Amicable Settlements: A Pathway Forward for Owners Facing Personal Guarantees

By John Hyde, Managing Director, Special Situations, Graphic Arts Advisors

The decision to fix, sell, or close a company that is treading water financially is never easy. 

For many owners in the printing, mailing, and graphic communications industries, the weight of personal guarantees often makes the situation feel impossible.

I frequently hear from owners who say:

“I have no options. If I close, my guarantees will be called, and I’ll lose everything. My only choices are to keep paying, even though the business is failing, or file for bankruptcy.”

That “no-way-out” feeling is common—but it isn’t always true. While personal guarantees are legal contracts and cannot simply be erased, there is another pathway: amicable settlements.

What Do We Mean by “Amicable Settlement”?

An amicable settlement is not about “getting out of” a personal guarantee. Instead, it’s about negotiating a fair, practical resolution with creditors—outside of bankruptcy—that allows owners to move forward without losing everything.

Settlements are possible because creditors themselves face competing pressures. Their willingness to resolve depends on three critical variables: legal liability, collectability, and timing.

The Three Variables That Shape Settlements

1. Legal Liability

This is often the most challenging piece. What is the actual legal obligation under the guarantee? You’d be surprised how often lenders and borrowers disagree on the number.

Why? Loans and leases are frequently sold or transferred to multiple parties, and the paperwork doesn’t always follow cleanly. Creditors may rely on outdated or incorrect information. The first step in any settlement discussion is to carefully review the contracts and trace the obligations forward to establish the true liability.

2. Collectability

Many owners assume that if they have cash in the bank or equity in their home, creditors will never settle. That’s not the case. Collectability is only one factor in the equation. While strong personal assets may make negotiations more difficult, they don’t rule out the possibility of settlement.

The reality is that creditors weigh more than just whether they can collect. They must also consider whether it’s worth the time, expense, and uncertainty of pursuing the guarantor.

3. Timing

This is where the “secret sauce” lies. Timing can often outweigh the other two variables. Creditors are driven not just by contracts, but by how debts appear on their own books.

Factors such as:

• How long the guarantee has existed
• Whether the debt is in default (and for how long)
• Where the creditor stands in their financial calendar (month- or quarter-end)

All influence the appetite for settlement. Creditors are accountable to their boards, shareholders, and regulators. Sometimes, the best decision for them is to accept a reasonable settlement and move forward.

Where Do Personal Guarantee Settlements Come Up?

These situations commonly arise with:

• Bank loans
• Equipment lease deficiencies
• Merchant cash advances
• Credit cards
• Landlord lease obligations
• Supplier guarantees (such as paper or materials)

Each type of obligation has its own nuances, but they all fall under the same three-variable framework of legal, collectability, and timing.

Why Owners Shouldn’t Feel Stuck

For business owners under stress, it’s natural to think the only options are to fight to keep a struggling business alive or to declare bankruptcy. But in many cases, there is middle ground. With the right guidance, amicable settlements provide a viable path out from under the burden of personal guarantees.

At Graphic Arts Advisors, we’ve spent decades helping owners in the printing, mailing, and graphic communications industries navigate these exact challenges. By combining industry knowledge with financial expertise, we work to create outcomes that are fair to both creditors and owners—without the scorched-earth process of bankruptcy.

If your company is treading water and you’re worried about personal guarantees, know this: you are not alone, and you do have options.

John Hyde has more than 30 years as one of the leading consultants to the printing, mailing and graphics communications industries in the areas of mergers and acquisitions, non-bankruptcy debt restructuring, and orderly wind-down of assets and liabilities. Connect with GAA at www.graphicartsadvisors.com

Is Your Business Treading Water? Grab Hold of These Reality Checks.

Even successful companies in the printing, packaging, mailing, and graphic communications sectors can experience a sudden shift in fortunes. A once-thriving operation can quickly begin to struggle—sometimes without clear warning signs.

Downturns can be triggered in many ways. Some are internal, such as the departure of a top salesperson, the loss of a key account, or a major customer scaling back its print marketing budget. Others stem from external forces, like supply shortages, price volatility in paper, or broader market disruptions such as trade wars or public health crises.

Regardless of the cause, the early stages of financial distress often bring confusion, wishful thinking, and costly missteps. Graphic Arts Advisors’ Special Situations Practice has identified five common misunderstandings that arise during periods of financial instability—and offers key insights on how to address each one.

Misunderstanding 1:

“There are no personal guarantees on loans, so there’s nothing to worry about.”

Reality Check:

Even without a signed personal guaranty, owners may still face personal liability. Creditors can argue that certain actions—such as incurring new debt when insolvency is apparent—constitute misconduct, exposing officers to claims outside the protection of the corporate veil. These situations often lead to what GAA calls a “backdoor personal guaranty.”

Guidance:

A detailed analysis of contracts, creditor claims, and asset ownership is essential to developing a risk-mitigated plan for either an M&A exit or an orderly wind-down. Non-contractual liability issues arise in approximately one-third of the special situations reviewed by GAA. Many can be avoided with early, experienced intervention.

Misunderstanding 2:

“Our accountant says we have enough assets to cover the debt during M&A.”

Reality Check:

Accountants may base assessments on static balance sheets—but a true exit requires deep industry context. In our evaluations--often sought as a second opinion--we find that there is a general lack of insight among professionals around:

• Customer obligations such as deposits, postage, and work-in-process at the time of business transition.

• The hidden costs of disposing of equipment, including labor to run a press for showing it to equipment buyers and keeping the lights on during the auction process.

• The working capital necessary to implement the orderly wind-down, whether or not there was an M&A closing.

Essentially, there can be months of expenses yet to be incurred beyond what is accrued on the balance sheet before a business is fully wound down.

Guidance:

Generalists often miss the hidden value in customer relationships and data assets. In one case, a client was advised to liquidate immediately—but an expert second opinion revealed seven figures in intangible value. That value would have been lost without industry-specific insight into distressed M&A.

Misunderstanding 3:

“We’ll close the company and move the customers to a new venture in exchange for equity.”

Reality Check:

Customer relationships, data files, estimates, and job histories are corporate assets—not personal ones. While customer loyalty is important, the legal and financial value of those relationships belongs to the original entity and its creditors.

Guidance:

Attempting to transfer these assets without proper planning can result in litigation. However, if handled correctly, customer goodwill can be a powerful asset in a non-bankruptcy wind-down or M&A scenario that benefits all stakeholders, including creditors.

Misunderstanding 4:

“The leasing company will just take back the equipment and we’ll be done.”

Reality Check:

The occasional instance may arise where surrendering the equipment back to the lender is legally documented as the final and full settlement, however returning leased equipment rarely ends the obligation. Lenders typically pursue the full value of the lease, even after repossession, unless a formal settlement is negotiated.

Guidance:

Lease resolution requires negotiation and nuance. GAA’s experience shows that tradecraft and situational leverage—not boilerplate contract terms—often determine the outcome. Each lease scenario must be evaluated on its own facts.

Misunderstanding 5:

“We’ll shut the doors—creditors won’t get anything.”

Reality Check:

This approach invites serious legal consequences. Creditors may pursue officers for breach of fiduciary duty or fraud, especially if they detect an intent to dodge obligations. Conversely, a fair, transparent plan for addressing liabilities often results in creditor cooperation.

Guidance:

Stakeholders are more likely to support an orderly wind-down when they see clear intent to treat obligations responsibly. Early engagement with specialists in industry-specific wind-downs and expertise in special situations is key to building trust and avoiding litigation.

Closing Thoughts


Companies in distress need more than a generalist’s advice. Misunderstandings about liabilities, asset value, and creditor rights can turn an avoidable situation into a crisis. GAA’s Special Situations practice brings the printing industry expertise required to assess the facts, identify options, and create actionable paths forward—whether through M&A, restructuring, or a non-bankruptcy wind-down. Expecting the unexpected and preparing for the worst before it arrives can make all the difference.

Three Challenges with Loans and Debt Restructuring

From my front-row seat as a consultant specializing in distressed company debt restructuring, I can point out three challenges affecting the current environment for business loans and restructuring:

Borrowers are receiving less responsiveness from banks who outsourced loan administration while trimming the ranks in-house staff.

We have also seen an instance where the push-and-pull of negotiations slowed to a grinding halt as the lender rotated outsourced work from one firm to another, essentially forcing a do-over of facts, figures, and assumptions while the new firm got up to speed.

Requests for lien releases in the context of an asset sale have become complicated ordeals.

The SBA is hardly flexible when it comes to restructuring of debts that are covered by their blanket lien on all assets. The prevalence of SBA loans stemming from Covid-era government financing has increased the number of cases where UCC lien releases require specialized expertise. As a result, assumptions of what a bank may or may not do are less certain these days.

Technology such as auto-debits do not easily conform to the established norm of lender-borrower loan workouts.

We heard of a printing company loan workout where the lender was incensed when it learned that the treading water borrower allowed unsecured creditors to be paid ahead of the bank. The excuse that the controller was unable to turn off the auto debits for credit card payments fell on deaf ears.

Decoding Buyer-Seller Financial Dynamics

 

 

Your Money - Who Wants to Know?

Balancing Disclosure and Risk in Printing Industry M&A

Imagine you are buying a house, and the seller demands to know your remodeling plans and projections for future resale profits. In residential real estate, that request would likely be met with skepticism.

However, in the world of mergers and acquisitions (M&A), especially within the graphic arts and printing industries, sellers often expect a deeper look into a buyer's plans. Why? Because M&A deals often involve complex payment structures, such as earnouts, royalties, equity rollover, or contingent notes, all of which make the seller a future stakeholder in the buyer’s success. If the seller will be leasing property to the buyer or remains employed post-closing, their interest in the buyer’s financial health becomes even more justified.

Why Sellers Want Buyer Information

When sellers are offered performance-based consideration rather than guaranteed money, their future asset monetization depends on the buyer’s success. Therefore, they reasonably want to evaluate the buyer’s financial viability and growth plans to ensure that the business strategy is sound and that the buyer can fulfill their obligations.

Common questions asked by sellers include:

• Does the buyer have sufficient ability to finance future capital investments to grow the business?
• What’s the buyer’s transition plan?
• Does the buyer’s bank agree with projections for consolidation savings?
• How much working capital will be required post-acquisition?

Earnouts and All-Cash Deals

The choice of payment structure significantly influences the level of scrutiny from the seller. When an all-cash deal is on the table, the seller typically has no stake in the future business performance, reducing the need for in-depth buyer disclosure. The transaction is straightforward—the seller gets paid, and the buyer takes on full ownership risk.

However, all-cash deals are rarely available to sellers in the absence of stellar financial statements or a deep discount to fair market value. A word of caution for sellers: requiring an all-cash deal is an invitation for low offers. That’s because customer retention risk is inherent to printing industry M&A. Sharing of the customer retention risk is usually in the seller’s best interest to entice the highest possible offer. It is the role of the M&A advisor to balance the price and structure of the transaction to fairly allocate performance-risk.

Given that most acquisitions involve some form of risk-sharing, sellers want to know that the buyer’s plans  are feasible to achieve. Sellers want to assess the probability that performance-based consideration will actually be received.

The Value of Financial Transparency

As a buyer, it may be tempting to push back on seller requests for financial information but sharing select details early in negotiations can build trust and smooth the path to a successful deal. Buyers who provide financial statements, demonstrate creditworthiness and show strong supplier relationships can reassure sellers of their ability to deliver on future payments.

This mutual disclosure fosters a partnership mindset, where both parties are committed to the success of the deal and the post-M&A closing transition.

Planning for Financial Disclosure

Buyers can increase their chances of success by preparing financial documentation in advance. This homework includes consulting with their bank to confirm financing readiness and securing a solid credit rating. By being proactive, buyers signal seriousness and professionalism, which can lead to more favorable deal structures and stronger negotiating positions.

Financial transparency between buyers and sellers is the norm in graphic arts and printing company mergers and acquisitions, especially when earnout provisions or other risk-based payment structures are involved. Both sides are advised to share key financial details to build trust and ensure a successful acquisition. Buyers and sellers alike need to be prepared for two-way financial disclosure, helping them navigate M&A transactions with clarity and confidence.

Ultimately, the more informed both parties are, the higher the likelihood of success for both buyer and seller.

Considering a Merchant Cash Advance for Your Company? Beware!

What is a merchant cash advance?

A merchant cash advance is a lump-sum payment from a lender based on future credit or debit card sales. It’s different from traditional bank financing and distinct from alternative financing like factoring or asset-based lending, which have been around for a long time. In the realm of financing options for companies struggling to keep up with their loans and leases, merchant cash advance loans are far riskier because of the onerous terms and conditions often obscured in the legalese fine print.

Why has there been a rise in the popularity of merchant cash advance lenders?

They are easily accessible online with a relatively simple application. The process is nowhere near the depth or scope required for bank financing or asset-based lending.

What are their lending criteria?

Most merchant cash advance lenders don’t examine the company's cash flow. They do not assess the company’s balance sheet, nor do they ask probing questions about business viability. They focus on the creditworthiness of the underlying customer of the borrowing company.

What are the costs?

Merchant cash lenders charge high interest rates and various fees, making the overall cost of money extremely high. When you break down the dollars-in versus dollars-out over the duration of the loan, you realize just how expensive it is.

This is short-term borrowing to get out of a bad situation. I suggest that these loans be viewed as rented equity investment. It’s a new money infusion to fill a gap in the capital structure of the business. Long-term revenue decline, peaks of profitability and valleys of losses, capital expenditures that have not yet generated sufficient return on investment, and other structural financial setbacks can result in the moment in time when the situation looks bleak. At these times, the cost of new money is measured against avoidance of greater harm such as running out of money and having the doors shut on the business. Merchant cash advances are often the last resort for borrowers, venturing into a quasi-street-money world of lending.

If the company is solvent and making money, this kind of lending does not make sense. But for companies struggling to survive, it can be a necessary, albeit expensive, solution to an immediate need. An example of one such situation might be the company’s health insurance is about to lapse and employees will lose their healthcare coverage. A merchant cash advance might be a better alternative than having employees’ claims go unpaid.

These loans fill the need for survival money at a critical juncture and should only be used as a last resort.

What alternative directions could companies consider instead of thinking this quick fix will save the day?

Many business owners who turn to merchant cash advances have already exhausted other alternatives. They have leaned heavily on trade creditors, deferred lease payments, and cut overhead. I suggest reviewing restructuring options before jumping into the world of merchant cash advances.

How do these lenders see themselves?

Some merchant cash advance lenders see themselves as a technology solution, akin to Uber or Lyft in their respective industries. They position themselves not as lenders but as future accounts receivable purchasers, entering into a contract with your company to acquire new invoices being generated. They claim it's a contract for the future purchase of receivables, not a loan, and thus they don't need to act like lenders. However, merchant lenders will most often file UCCs to make their presence known to other lenders and any prospective buyer of the business.

(A UCC filing is a document that lenders use to establish their legal right to assets that a borrower uses to secure a loan, allowing the lender to seize the borrower’s collateral in the case of default).

Their position that they are not lenders of money has major implications for financial restructuring, whether the process involves bankruptcy, secured party sale, or non-bankruptcy orderly wind-down.

In the end, how do they collect their repayments?

In addition to high interest rates and fees, their tools for repayment and debt collection are what make them truly toxic to vulnerable businesses. It’s critical to understand these lenders repay themselves through daily auto-debits from the company's checking account. Until this actually starts happening, it’s difficult for borrowers to really appreciate how hard it is to manage cash flow when there is a daily auto-debt right out of the checking account.

By definition, the company that's short on funds now has to navigate the juggling act of receivables and payables along with looking at the bank account to see what auto debit is hitting today. This daily debit adds a layer of complexity to an already difficult situation.

If someone is looking to buy a company, should they ask about merchant cash advances? How can they identify them when digging into the financials, and what is their responsibility if they purchase the company?

The implications of merchant cash advance loans in buying or selling a company are serious. The M&A buyer won't want to take on the seller's responsibility for merchant cash loans. Identifying these advances is crucial, but they may not even appear on the balance sheet. And, if they do, there is often a variance between what the borrower thinks is the payoff amount and the actual amount the lender insists upon receiving.

What can happen if you fall behind with a merchant lender?

The small type in merchant cash advance agreements often gives the merchant lender the right to contact the company’s customers directly in a default situation. This can create irreparable damage to the company’s reputation and jeopardize the sale of intangibles to a potential M&A buyer. We had a recent case in which the M&A buyer had to go to bat against the seller’s merchant cash advance lender who was sending legal hardball notices to the customers. It was resolved, but only after an intense effort to push back on this over-the-top aggression.

Special Situations and Debt Restructuring in the Printing Industry

 Graphic Arts Advisors, LLC, M&A advisors and consultants to owners, lenders and investors in the printing, mailing, packaging, digital advertising, and graphic communications industries, is pleased to present a conversation with John Hyde, Esq., Managing Director of Special Situations, the leading expert in M&A involving financially-challenged companies in this marketplace.

Q: Your colleagues at Graphic Arts Advisors and others in the printing industry say that market conditions are currently positive for mergers and acquisitions. Do you agree?

JH: Yes, the current M&A marketplace is robust for businesses sold as a going concern or as a tuck-in. In most cases, buyers are placing significant value on the intangible assets such as customer relationships, the book-of-business, market presence, qualified and trained employees, and functioning infrastructure with installed equipment up and running.

Q: What does this mean for owners and investors of companies that find themselves financially “upside-down,” owing more in debts than they can reasonably pay off?

JH: If the company’s assets are worth less than what is owed to creditors, then the owners or investors face lousy options such as using personal savings to pay the shortfall, slog it out in bankruptcy court, abruptly walk away with resultant reputational harm and risk of legal action, or negotiate amicable and fair debt settlements in a structured process outside of bankruptcy court. The latter option, often known as non-bankruptcy debt restructuring, is usually less painful than the other more extreme measures. Non-bankruptcy debt restructuring is ideally suited to owners and investors of financially-challenged companies who prefer to achieve a graceful transition that is amicable for customers, employees, suppliers, lenders, investors, partners, and landlords.

Q: What do you mean by “restructuring”?

JH: Restructuring is the art and science of substituting one obligation for another. It often involves a process designed to negotiate fair settlements with creditors as part of a comprehensive plan.

Q; Is it a legal term?

JH: Yes and no. There is no exact legal term called “restructuring”, but professionals engaged in the practice incorporate elements of federal bankruptcy law, state creditor rights laws under Article 9 of the Uniform Commercial Code, state laws related to real estate foreclosure, and plain-vanilla contract law. Restructuring in practice goes beyond legal principles by factoring into the mix financial, legal, tax, accounting, corporate, psychological, reputational, family, and ethical considerations.

Q: Is “restructuring” legally binding like in a formal bankruptcy case?

JH: It can be if carried out under the auspices of a court-appointed receiver or trustee, but “restructuring” as a trade craft is broader in meaning. It includes unspoken understandings, subtle nuances, and an extensive treasure chest of tactical opportunities based on what works and what doesn’t work in these kinds of cases.

Q: When do company owners and investors need to consider non-bankruptcy debt restructuring?

JH: Non-bankruptcy debt restructuring is worth considering in situations where too much debt prevents the owner from simply getting out from under. It is applicable to M&A scenarios, but it is also used when M&A is not feasible, desirable, or fast enough. It is not uncommon for a buyer’s M&A offer to leave the potential seller with significant retained liability. Non-bankruptcy debt restructuring fills the void so the valuable parts of the business can be sold and transitioned to a strategic acquirer.

Q: Does this mean that the financially challenged seller can accept an M&A offer that does not cover the debts?

JH: The value placed on intangible assets such as the customer relationships, market presence, book-of-business, qualified and trained employees, and equipment up and running, provides a form of currency. Intangibles value is frequently combined with equipment sale proceeds and monetized retained assets such as AR and real estate, to create a pool of funds from which necessary expenses are paid and debts are settled in a fair manner. A graceful transition does not require every debt to be paid in full. Settlements need to be fair, but not necessarily full payment of debt.

Q: What about where there are enough assets, but it is going to take time for money to come in?

JH: Non-bankruptcy debt restructuring is an appropriate option if the debts are due before the assets can be monetized. There may not be enough cash at the M&A closing or in the bank on final day of operations to take care of everything at the same time. That doesn’t mean the price was too low or that the assets aren’t worth enough. Many sellers negotiate a fair M&A deal that supplements the cash received at closing with future payments from the buyer in the form of an earn-out, royalty, or promissory note. However, typical creditors (bank, suppliers, leasing companies, credit cards, and landlords) expect payment much sooner than when those future payments would come in. Restructuring is often a process intended to align timing expectations with reasonable forecast of future money that would come from the M&A buyer or other asset sale transactions by seller, effectively a payment plan based on a future likely stream of income.

Q: If there’s too much debt or the creditors will have to wait for payment in the future, why not just file for bankruptcy or walk-away?

JH: Very few cases in our industry are good candidates for bankruptcy. Legal costs are one prohibiting factor, but even more so is that every creditor would have to be treated the same within certain classes of creditor. Treating all creditors alike regardless of who they are without context, background, history, and past relationship does not resonate with owners. There is something fundamentally different about the big paper houses, the local mailing house, the die cutter down the street, and the freelance designer who saved a customer by touching up a job at night. Credit cards, office supplies, freight invoices, and click charges are just not the same.

Q: It sounds like flexibility, affordability, and discretion are more readily found in non-bankruptcy cases, is that right?

JH: Non-bankruptcy debt restructuring offers greater flexibility than bankruptcy, to a point. There has to be fairness, and formal bankruptcy is the unspoken backdrop to negotiations. It is up to the skilled advisor to read the landscape properly in crafting the plan that accommodates different interests. I am not a bankruptcy lawyer, but I do look at the bankruptcy options. The first phone call I receive often comes after an owner has just received a bankruptcy consultation and did not like what they heard.

Q: Why are there are so few bankruptcy cases in this industry?

JH: In addition to the requirement to treat all creditors equally within certain classes and the high legal fees, the icing on the cake against bankruptcy is that survival in our industry is hard enough without competitors waiving your chapter 11 petition in your customers faces. Customer’s perceived risk of sending a job to supplier that is operating in bankruptcy is huge. In some of our industry segments that involve privacy laws and data security, such as transactional printing, bankruptcy is contractually immediate grounds for termination of the relationship. In other words, the value of the company’s intangible assets, its customer relationships, is more negatively affected by a bankruptcy filing than it would be in non-bankruptcy debt restructuring.

Q: How about when an owner that wants, or more critically, needs to sell their company and is under the gun to sell quickly due to the mounting debt load?

JH: In these instances, we can run a dual process in which our special assets team plans out the restructuring and work with the creditors to extend the time frame, while our other partners run a robust sale process to find the best offer for the business assets. Notably, creditors, especially the secured lenders, will appreciate that the sale is being conducted by industry-specific specialists in a transparent, arms-length process. That makes a tremendous difference when the secured lenders are asked for forbearance or other concessions.

Q: How do you assess the current receptiveness for settlements from lenders, trade suppliers, and other creditors in these situations?

A: Creditors’ expectations for payment in full are high in today’s climate. Expectations were high in 2018, then came down significantly in the early stages of the pandemic and have since rebounded. As in pre-Covid times, there is little tolerance for a plan that gives creditors five cents on the dollar while the former owner walks away with their shirt on. That said, this is not a climate in which hard-ball tactics are used to punish owners that are in a difficult financial position. We find that our clients are coming out okay as long as they can substantiate a well-presented offer that is fair and reasonable in the particular case.