TSL Feature Articles

As circumstances are moving rapidly, companies and their lenders are dealing with unprecedented times.  While companies try to determine the full impact of the current economic tailspin on their businesses, lenders are looking to understand their risks and how they can respond to them.

The credit agreement sets out the rules of the road for the relationship between a company and its lenders.  In the list of credit agreement provisions set out below we attempt to provide a map for the secured lender for navigating those rules, anticipating where there may be bumps or wrong turns and providing some guidance for where a lender may go in the credit agreement to determine its path when confronted with a borrower in distress.

Do not underestimate the impact of the Coronavirus on a company’s Q1 and Q2 2020 financial results.  The supply chain issues are unknown, the potential economic slowdown is unknown, and the length of time the impact will be felt is unknown.

This will certainly be a standard excuse for performance weakness that will be heard over the next year.  Be prepared!

As a lender, which borrowers do you consider for impact, and what do you do to stay ahead of the problem?

If passed, proposed New York State Senate Bill S5470 (“the Bill”) would impose a disclosure requirement upon certain New York commercial lenders. This proposal follows a trend exemplified most notably in California, which amended the California Financing Law to require licensed commercial lenders and brokers to issue new disclosures to commercial borrowers in that state, including loans made via an internet platform.

The required disclosures of the Bill approximate those in the loan estimate form issued to home buyers by residential mortgage lenders under the federal Truth in Lending Act. The Bill has several exceptions, leaving much of the commercial lending community unaffected and placing substantial regulatory burdens on a narrow remaining segment

Vernon Francois grew up in a Rastafarian household where the weekly tradition was having his hair braided every Sunday. The experience was so painful that he decided to learn how to braid hair himself, using carpets and window shade edges as practice.

All that practice paid off. When he was just Vernon Francois grew up in a Rastafarian household where the weekly tradition was having his hair braided every Sunday. The experience was so painful that he decided to learn how to braid hair himself, using carpets and window shade edges as practice.

The author discusses the potential perils of improper use of “incorporation by reference” in commercial lending transactions, as well as potential strategies for reducing potential incorporation by reference hazards.

Refinitiv’s director of analytics shares with readers the latest data surrounding the syndicated market.

Hamid Namazie is managing partner of McGuireWoods’ Los Angeles - Downtown office. He concentrates his practice on representing a wide range of clients, including banks, institutional lenders and commercial finance companies, providing asset-based loans.

FTC Commercial Corporation was launched in 2002 with a strong focus on small and medium-size enterprise. Co-founder Ken Wengrod tapped into his experience, having worked in factoring and retail to create a company that understands the entire trade cycle of manufacturing and importing.

Q3 2019 results generally demonstrate the continuation of trends observed throughout 2019.  Year to date, we continue to have growth in the industry as a whole and credit quality remains solid.  There are a few notable deviations from trends observed throughout the year as we will see.

General economic conditions continue to be top of mind for the secured finance community, but it is interesting to note that we continue to see a divergence between Bank and Non-Bank Lenders with respect to the SFNet Confidence Index. As a reminder, starting in 2019, we have chosen to divide the ABL lender universe along Bank and Non-Bank lines, as opposed to our previous methodology of splitting up the ABL lender universe by portfolio size.

Joseph Nemia looks back at 2019 and discusses what the secured finance industry can expect to see in 2020.

A Demica senior director explains how trade receivable securitization programs can be used as a valuable alternative to other funding solutions, especially in cross-border or challenging credit environments.

At 33 years old, Shauna was diagnosed with breast cancer - a head-spinning diagnosis for anyone, but especially a new mother at 33 who considered herself fairly healthy. Then came the draining, life-sapping chemo that would save her life, but leave her feeling weak and malnourished

The time and cost of liquidating collateral can often be prohibitive and is always a nuisance. Of course, this problem is exacerbated when the asset value is less than the balance owed to the secured creditor(s), leaving no value for unsecured creditors. Lenders often step up and carve out an amount to be distributed to unsecured creditors to enable a Chapter 11 to proceed to effect a sale of the debtor’s assets free and clear of liens. Some consider this to be a price to be paid by secured creditors for the privilege of utilizing the bankruptcy court to sell their collateral. Thus, the cost of a bankruptcy can be very expensive not only to the debtor, but also to the secured lender. As a result, small and middle-market companies and their lenders have grown receptive to non-bankruptcy vehicles for the disposition of assets.

The transformation of retail is creating new and significant challenges for traditional retailers. Antony Karabus, CEO of HRC Advisory, explores those obstacles and offers solutions to help retailers survive – and even thrive — during these tumultuous times.

Last Fall, Webster Bank announced that Abby Parsonnet was named executive managing director, head of Asset Based Lending (ABL) for Webster Bank. In her role, she oversees the nationwide Asset-Based Lending and Commercial Services teams at Webster, which also includes staffing solutions and factoring. She reports to Chris Motl, president of Commercial Banking.

As head of ABL, Parsonnet is responsible for continuing Webster’s strong tradition of excellence in delivering customized working capital solutions to middle- market clients and sponsors.  She will lead a team of bankers based in strategic markets nationwide.

Here, Abby discusses her career, goals in her new role, how the merger with Sterling National Bank helped to expand Webster’s offerings, particularly in ABL and factoring, and more.

In the coming months, be on the lookout for an increase in seller-financed mergers and acquisitions activity. 

For the last several years, the small and midsized business segment was experiencing increasing purchase price multiples fueled by low interest rates and the available credit made possible by banks’ confidence in a robust economy. Owners of solid businesses – motivated by a desire to close deals before anticipated possible changes in the current tax code – staged auctions and entertained multiple competing all-cash offers. Buyers took advantage of easy credit and low rates to deploy a combination of debt and equity, with debt on the portion of a deal supported by commercial real estate often exceeding 70%. 

TSL Express’ senior editor sat down with Tim Burniston, senior advisor, Regulatory Strategy for Wolters Kluwer Compliance Solutions to discuss the results of Wolters Kluwer’s Regulatory & Risk Management Indicator Survey. Burniston advises the Wolters Kluwer Governance, Risk, and Compliance executive leadership team and clients on emerging issues, legislative and regulatory developments, and regulatory strategy.

Now in its tenth year, the Indicator “takes the pulse” of the U.S. banking industry and is based on 10 different factors: compliance, regulatory environmental and risk management factors.  The Regulatory & Risk Management Indicator Survey was conducted between July 27-September 9, 2022, and received 328 responses. Survey respondents are primarily from smaller banks, savings and loan institutions and credit unions. Keeping pace with the volume, scope and breadth of regulatory changes topped the list of key concerns facing U.S. banks, credit unions, and other lenders. To learn more about the survey, click here.

As a leading authority and 25-year veteran of the investment and commercial banking sectors, Dave Kucera, head of Capital One’s Financial Institutions Group, sat with TSL Express’ senior editor to discuss best practices for managing market cycles. Including the commercial banking trends to watch out for in 2023 and key steps financial institutions can take to better navigate the current economic landscape. 

Conference Aims to Set New Strategies for the New World

Now three years since the onset of the global pandemic, the asset-based capital market, like so many others, finds itself at a new beginning. While the economy and environment continue to shift, the asset-based capital community has taken uncertainty into account for its business plans as it marches into a new year. SFNet’s ABCC theme, “The Great Reboot,” is about setting new strategies for a new world.

“We’ve been able to bring together some of the best minds in the space to help us put these changes in context and offer practical implications for our business plans going forward,” Rich Gumbrecht, SFNet CEO, said.  I don’t know if we’ve ever had a more august set of speakers.  You’ll want to take good notes.”

The third quarter saw continued confidence in the asset-based lending market, according to data released by the Secured Finance Network, and that was welcome news as the country wrestles with inflation, rising interest rates and a slowed economy.

SFNet surveyed bank and non-bank asset-based lenders (ABLs) on key indicators for its quarterly Asset-Based Lending Index and SFNet Confidence Index.  

The third quarter saw continued confidence in the asset-based lending market, according to data released by the Secured Finance Network, and that was welcome news as the country wrestles with inflation, rising interest rates and a slowed economy.

SFNet surveyed bank and non-bank asset-based lenders (ABLs) on key indicators for its quarterly Asset-Based Lending Index and SFNet Confidence Index.  

“Despite the challenges, the asset-based lending industry remains on solid footing,” said SFNet CEO Richard D. Gumbrecht. “Portfolio performance is strong by historical standards, commitments are up, and lenders anticipate strong demand. Overall, the industry is decently-positioned to weather worsening business conditions and a potential recession.”

SFNet’s Annual Convention was held in Austin from November 9-11.  This article provides an overview of the key topics addressed. 

Listening to Convention keynoter Peter Zeihan’s geopolitical perspectives is a reminder of the many global and economic disruptors possible and all that one can’t control. However, in keeping with the event’s theme of "Mastering Disruption, Putting Capital to Work in the New Global Environment,” the breakout sessions triggered healthy discussion about what a new global environment for lending could look like, how data could be more strategically used to protect cross-border interests or prevent fraud, and how new supply chain models are forming. The factoring and asset-based lending sessions presented ways to master their markets while facing recessionary headwinds.

Besides the many opportunities to network with peers and clients, attendees in Austin, TX, could absorb others’ views on economic conditions affecting the industry and dive into niche topics of strategic importance.

The way an organization handles change is critical to its success, particularly during periods of uncertainty. In the year 500 B.C., the Greek philosopher Heraclitus observed that life was in flux, with everything constantly on the verge of becoming something else. He noted that resisting this natural flow was a hindrance to progress and growth in all aspects of life.

Resistance, however, has proven to be a very normal human response to change over the centuries and in organizations today, often manifests itself in the form of the formidable Change-Prevention Committee.