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Hastings Business Law Journal

Abstract

These troubled economic times present numerous concerns to the ongoing business. However, the dreaded "workout" scenario that arises when a corporation breaches its debt covenants should not be so feared. This Practitioner's Guide will address the workout scenario and provide insight on how to negotiate with a lender and how to address the most common negotiating points in a workout with particular focus on the perspective of sponsors and other significant investors. Part I will discuss how a workout scenario arises and the positions and goals of the respective parties involved-the borrower, the lender and the sponsor. Part II lays out in detail the negotiation process and the relative points of leverage typically involved in a workout. This Practitioner's Guide provides practical suggestions to increase the likelihood of successfully navigating a workout to the mutual benefit of all parties involved.

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