ABA Banking Journal - July 2008 - (Page 27)

COVER STORY Workout Time Call it an art, a science, or just a trip through the intensive-care ward. Loan Workout has returned to many banks. Experts provide guidance to those who’ve never seen such times I ILLUSTRATION BY PAUL LEVINSON / IMAGES.COM n chapter two of Tom Wolfe’s 1998 novel, A Man in Full, Atlanta real estate tycoon Charlie Croker has been summoned to the fictional “PlannersBanc” for a meeting. With his CFO and assorted staff in tow, he isn’t sure what to expect. He just knows his company has fallen behind on principal and interest payments on a mountain of debt—$515 million to PlannersBanc alone—and that things aren’t looking too good because one of his biggest new properties, Croker Concourse, isn’t doing well. In inimitable (and often profane) prose, Wolfe describes the thoughts, words, and actions of the bankers, advisors, and borrower in the meeting. Croker, in better times, was wooed by PlannersBanc in wood-lined executive dining rooms, served gourmet fare; now, he finds himself in a windowless room, meeting at a nondescript table, facing orange juice in paper cups and inedible pastries. There’s a plant in the room, but it’s dead. And then the real leader of the meeting reveals himself. He is Harry Zale, whose trademark is a pair of suspenders bearing skull-and-crossbones. As described by Wolf: “He was a workout artiste, and the workout artistes were the Marines, the commandos, the G.I. Joes of commercial By Steve Cocheo, executive editor banking. Or maybe the term should be D.I., for drill instructor, since Harry liked to refer to what was about to take place not as a workout session but as ‘boot camp’.” The scene that ensues is one from Borrower Hell. Among the measures Zale orders the pinioned Croker to take is the sale of his beloved quail hunting plantation, “Turpmtime.” Wolfe is known for his often over-the-top prose. Much in the scene he describes makes for a good novel, and shouldn’t be mistaken for reportage from real life. But real-life attorney Thomas DeVine, of Snell & Wilmer, LLP’s Denver office, actually keeps copies of Wolfe’s book on hand. He gives presentations to client banks’ staffs, now and then, in the detailed basics of handling troubled loans. If someone asks particularly good questions, or answers DeVine’s own questions correctly, he bestows a copy. But Wolfe’s book is more than just a freebie. DeVine uses this book, and the story in its second chapter, to convey a point that both lender and borrower need to understand when a credit has deteriorated to the stage where a loan has entered workout: “The party is over.” Cleaning up after the party Indeed, while DeVine’s meaning is specific to the individual credit under discussion, those words describe a new phase for Subscribe at www.ababj.com ABA BANKING JOURNAL/JULY 2008 27 http://www.amazon.com/gp/product/0553381334?ie=UTF8&tag=ababankingjou20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0553381334 http://www.swlaw.com http://www.swlaw.com http://IMAGES.COM http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - July 2008

ABA Banking Journal - July 2008 Contents Editor’s Column Searching for New Paradigms at BIS Snapshot: C&I Asset Quality 100th Anniversary: Then & Now BofA "Event Concept" Wins Awards, and Customers ABA Resources ABA Chairman’s Position M&A: Beat Today's Market Blues Pass the Aspirin Cover Story: Workout Time Correspondent Banking: No Longer Just a Handshake Business Getting IT Right By Thinking It Through Webnotes Are You "Red Flag" Ready? Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - July 2008

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