James Cochran Published in Commercial Lending Review
“Commercial Loan Recovery 101: How to Obtain Maximum Returns”

James Cochran’s co-authored article, “Commercial Loan Recovery 101: How to Obtain Maximum Returns,” was published in the May/June issue of Commercial Lending Review. The article provides an overview of the basics of commercial loan recovery. The authors discuss early warning signs to recognize when a loan might be in trouble and provide action steps for lenders to take once there is a serious concern.

In the article, the authors describe how lenders can undertake five basic actions that do not require court action: forbearance, workouts, deeds in lieu of foreclosure, nonjudicial foreclosures and certain other enforcement actions, and sales of notes, judgments or bids. They note, “When determining the best recovery strategy, the lender generally should consider four critical objectives: control of the cash, control of the business operation, maintaining or enhancing value, and positioning for sale or refinancing.” Additionally, the authors address how receiverships and bankruptcy filings can significantly alter the rules affecting loan recovery efforts. The authors note that “it is important for the lender to develop its exit strategy as soon as reasonably practicable.”

The authors conclude, “whether the lender’s collateral consists of traditional or nontraditional assets, the options for dealing with a nonperforming commercial loan are many, ranging from workouts and deeds in lieu of foreclosure to receiverships and foreclosures to note sales and beyond. An informed lender or special servicer needs to be well versed in all of the available tools in order to effectively maximize the ultimate loan recovery.”