Lessons to Be Learned: Auto Supplier Industry Workouts Encourage Parties to Communicate

Business Credit - Vol. 108 Nbr. 10, November 2006

Thorne, Deborah L
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Id. vLex: VLEX-63522064

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Summary:

Credit professionals often find that the problem their company is experiencing is just one of many that the debtor has, and may be inextricably linked to similar problems being experienced by the debtor, its lenders, its customers and other vendors within the automobile supply industry. While the dynamics may be quite different than other industries, there are lessons to be learned from the multi-dimensional negotiations and resulting accommodation agreements which allow production and collection to continue -- ultimately leading to the satisfaction of many different interests of the players. Vendors to the debtor-supplier may refuse to extend credit terms, insisting on cash in advance or cash on delivery. The debtor-supplier's bank may realize that its collateral position is threatened and may threaten to cut off the line of credit it has advanced, or to call the term loan.

Headnotes:

Extract:

Lessons to Be Learned: Auto Supplier Industry Workouts Encourage Parties to Communicate

Credit professionals often find that the problem their company is experiencing is just one of many that the debtor has, and may be inextricably linked to similar problems being experienced by the debtor, its lenders, its customers and other vendors within the automobile supply industry. While the proper response may be to put pressure on the debtor and run with whatever you can get, it may be worth taking a look at the negotiations that often occur in this industry. While the dynamics may be quite different than other industries, there are lessons to be learned fro...



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