Vital Information About Troubled Debt Restructuring from a Financial Expert Witness
The market has changed dramatically due to COVID-19. This has led many banks and lenders to start exploring modifications for their clients. But are these modifications considered troubled debt restructuring?
The key is to look at the two primary considerations for a loan modification to be considered a form of troubled debt restructuring. They include:
The creditor granted more than an insignificant concession to the debtor that it would not otherwise consider; and,
The concession was made driven by the debtor’s financial difficulties.
Using these two requirements, it would appear that modifications granted in connection with COVID-19 do not meet the definition of a TDR. This is especially true if the same relief is given to all customers.
With the help of a financial expert witness, attorneys are better equipped to understand exactly what makes a TDR and why most of the modifications made over the past year would not qualify under those terms.
This has been a genuinely perilous and confusing time for both borrowers and lenders, which means even the most versed law firms could find themselves struggling to stay up to date on the latest changes. Thankfully, there are financial experts available to help shed some light on all of this confusion.