What a Century of Turnaround Work Taught Us About Lenders

A bank workout is not a fight to be won; it is a relationship to be managed.

The firms that understand that difference reach better outcomes for everyone at the table. Between the partners at this firm we hold over a century of collective experience sitting across the table from lenders in distressed situations, and almost everything we have learned reduces to that one sentence. The borrowers who treat the bank as an enemy lose options they did not know they had. The ones who treat it as the most important stakeholder in the room keep them.

The lender is not the adversary in a workout. The lender is the most important stakeholder in the room — and the sooner a management team treats the relationship that way, the more options stay open.

What follows is not one person's memory of one good outcome. It is a collective bench. Across our partnership we have stood in front of bank workout groups, special-assets officers, asset-based lenders, and the occasional hedge fund that bought the paper at a discount and arrived with a very different agenda. The lessons below are the ones that have held up across all of it — the single relationship that determines more turnaround outcomes than any other: the one between a borrower and the institution that holds its debt.

The lender is the most important person in the room

When a company trips a covenant or misses a payment, the owner's instinct is to manage the customers, reassure the employees, and keep the suppliers calm. They protect the relationships that feel most human — the long-time customer, the plant manager who has been there twenty years — and they avoid the one conversation that frightens them most. All of that matters. None of it matters as much as the lender. The bank holds the lever that determines whether the business has weeks, months, or no time at all. The avoidance is understandable. It is also exactly backward: a management team that does not understand this spends its energy in the wrong places and arrives at the lender's door already behind.

The lender controls liquidity. The lender controls the default clock. And in most middle-market credits, the lender controls whether the next conversation is a forbearance agreement or a demand letter. A restructuring firm brings value to the table, in part, simply by reordering the company's priorities so that the most consequential relationship gets the attention it deserves — and gets it early, while there is still something to negotiate with. The restructuring firm buys the borrower time with the bank: room to stabilize, to gather facts, and to put a credible plan on the table before the lender's patience is spent. A company negotiating alone rarely gets that room.

Trust is built before the crisis, and rebuilt after it

Here is the uncomfortable truth that decades of this work make plain. By the time a company is in front of a special-assets group, trust has usually already been damaged. The numbers came in late. The optimistic forecast did not hold. The owner said the second half would recover, and it did not. The bank has heard those sentences before, and it has learned to discount them. We even saw a situation where the borrower told the bank that they were fully collateralized in April, but then came back in May with a loan buyout firm and told the bank that they were severely undercollateralized. Nothing spends a lender's goodwill faster than a reversal of that size arriving with no warning.

The work of a restructuring team is to rebuild that trust quickly and deliberately. It is not done with promises. It is done with a credible, conservative, week-by-week picture of the business and a plan the lender can actually believe — most often anchored by a rolling 13-week cash flow forecast that the bank can audit against reality every Friday.

When a seasoned firm walks into the room, the dynamic changes — not because we are charming, but because the bank knows our name, knows our work, and knows that the forecast on the table was built by people who do not inflate the numbers to win the meeting. That reputation is the asset. It took years to build across our partnership, and we protect it in every engagement, because the next borrower we represent inherits it. A lender that has been burned by an advisor's rosy projections remembers it for a decade. A lender that has watched a firm deliver hard truths and hit its marks remembers that too — and discounts the next forecast far less.

What lenders actually want

Owners often believe the bank wants the keys, the collateral, or a pound of flesh. In the overwhelming majority of cases, the bank wants none of those things. A workout, a foreclosure, a receivership — each is expensive, slow, and bad for the lender's own reporting. Loan-loss reserves tie up capital. Examiners ask hard questions. The officer assigned to the credit would, almost always, rather see it cured than seized.

What the lender wants is to be repaid, or to see a credible path to repayment, with as little surprise as possible along the way. It was the bank's money to begin with, and it has every right to get it back. Some borrowers lose sight of that and start negotiating as though repayment were a favor rather than an obligation — a posture the other side of the table reads immediately.

That single insight reframes the entire negotiation. The borrower and the lender are not on opposite sides of a zero-sum fight. They share a powerful common interest in a recovered, paying business. The job of the advisor is to surface that shared interest and build a plan around it, so that the conversation stops being a confrontation and becomes a problem the two parties solve together. The forbearance period, the amended covenants, the modified amortization — these are not concessions wrung from an enemy. They are the terms on which a rational creditor agrees to give a credible plan room to work.

Forbearance is a window, not a victory

When a forbearance agreement is signed, owners sometimes exhale as if the problem is solved. It is not. A forbearance is a window — a defined period during which the lender agrees to hold its remedies while the company executes. The clock is running, and the milestones in that agreement are real. The companies that waste the window, that treat forbearance as a reprieve rather than a deadline, are the ones that find the second conversation far harder than the first.

The discipline a turnaround team brings inside that window is what gives it value. What the window is really for is confidence building measures — showing the bank, step by step and with our help, that the borrower can be trusted again. That is how a company earns the lender's cooperation, its time, and, where the facts warrant it, its concessions. In practice that discipline looks like this:

• Translate the agreement into a weekly cadence. Every covenant and milestone in the forbearance becomes a line in the operating rhythm, owned by a named person and reviewed every week.
• Report against the marks honestly — including the misses. A lender that hears about a shortfall from the borrower, before being asked, learns it is dealing with a team that will not hide the ball.
• Use the window to build the exit, not just survive it. Forbearance buys time to refinance, to sell a division, or to recapitalize. The borrowers who treat it as runway toward a defined exit fare far better than those who treat it as a pause.

A lender that sees a borrower hitting its marks and disclosing its shortfalls without being prompted is a lender that extends, that amends, that finds a way forward. The relationship compounds. Each kept promise makes the next request easier.

The special-assets group is not the enemy

When a credit moves from the relationship banker to the special-assets or workout group, owners often feel abandoned, even punished. The friendly banker who approved the loan is gone, replaced by an officer whose job is to manage problem credits. It feels like a demotion, and it is treated like one.

We see it differently. The special-assets officer is a professional who manages distressed situations every day. That person is not emotional about the credit, is not surprised by bad news, and is, frankly, easier to deal with than a relationship banker who feels personally let down by a loan they championed. A workout officer respects competence and candor. Bring a clear forecast, an honest assessment, and a realistic plan, and you will often find the special-assets group to be the most rational party at the table.

It helps to understand what that officer is measured on. The relationship banker is paid to grow the relationship; the workout officer is paid to reduce the bank's exposure and risk. Those are different jobs with different incentives, and a management team that keeps pitching growth to a workout officer is speaking the wrong language entirely. The firms that have spent decades in these rooms know the individuals, know the institutions, and know that the workout group responds to exactly the professionalism it practices.

Reassignment to special assets is not a verdict. It is a decision point — and the borrowers who treat it that way keep far more control than the ones who go quiet.

Why the collective bench matters

No single advisor has seen every situation. What gives a firm its strength in a lender negotiation is the depth behind the person in the chair. When one of our partners sits across from a bank, the experience of the entire partnership sits there too — the deal that went sideways in a different industry a decade ago, the forbearance structure that worked when nothing else would, the lender relationship one of us has carried for twenty years.

That accumulated judgment is what a borrower is really buying. It is also why every engagement here is led by a senior partner rather than handed to a junior team. We are business people first, not lifetime consultants; our partners have made payroll, negotiated with lenders, and sat in the operator's chair. The lender knows the difference between that and a pyramid of analysts, and so does the outcome.

What it comes down to

Strip away the documents and the negotiation, and a workout is a human relationship under pressure. The lender wants to be repaid and wants to stop being surprised. The borrower wants to survive with its options and its dignity intact. Between those two interests there is almost always a path, and finding it is the craft.

Over a century of this work — held collectively, across a partnership that has seen distress from every angle — teaches one lesson above all the others: the lender is not the obstacle to the turnaround. Managed honestly, the lender is the partner who makes it possible.

If your company is heading into a conversation with its bank, the time to prepare for it is before the meeting, not during it. That is the work we do through our turnaround and restructuring and interim management practices, and we would welcome a confidential conversation about yours.

Frequently asked questions

Is the lender really on my side in a workout?

Not on your side — but rarely against you either. The bank's strong preference, in almost every case, is to be repaid, because foreclosure and receivership are expensive and bad for its own reporting. You and the lender share a real interest in a recovered, paying business. The advisor's job is to surface that shared interest and build the plan around it.

My loan was moved to "special assets." Should I be alarmed?

Treat it as a decision point, not a verdict. Reassignment means the bank intends to watch the credit closely, and the burden of proof has shifted to you. The right response is to engage experienced help and bring a clear forecast and a realistic plan — not to go quiet. Workout officers are professionals who respect candor and competence.

What is forbearance, and what should I do with it?

A forbearance is a defined period during which the lender holds its remedies while you execute against agreed milestones. It is a window, not a victory. Use it to build a real exit — a refinancing, a sale of a division, a recapitalization — while hitting the marks and reporting honestly, including the misses. Wasting the window makes the next conversation far harder.

Why does it matter whether a senior partner handles the negotiation?

Because a lender can tell the difference between a seasoned operator and a junior analyst within minutes, and because the depth of a partnership's experience — the structures that have worked before, the institutions and officers it already knows — is exactly what a borrower is buying. At Inglewood every engagement is led by a senior partner from the first meeting.

Experienced hands at critical turns.