Chapter 20 Bank Checklist: Distressed Customers

• Jurisdiction: United States

Chapter 20 Bank Checklist: Distressed Customers

Note: This checklist addresses issues that depositories and lenders should consider when they have a distressed customer and does not include other internal approval, legal or regulatory issues or give legal advice toward resolving those issues. It also does not address all of the issues that may arise for the bank in its role as a secured lender. Consult bankruptcy professionals for a complete list.

[ ] 1. Review entire credit and loan files for complete loan documentation package, organization chart, loan history and trends leading to financial decline.

a. Look at record searches; are all public filings up to date?
b. Look at loan and account history. If past due, can payments be made to bring the account current or erase overdrafts? If not, send a reservation-of-rights letter to protect the bank's interests.
c. Chart all exposures at the institution so that the bank can make a coordinated approach to the customer.
d. Visit with the customer and visit at the customer's site to verify that the business remains real and operating.
e. Engage appropriate counsel.

[ ] 2.

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