trader in financial difficulties who said, with a certain degree of modesty, that he would like to help with the restructuring. In contrast, I have met handreds of business- men and business women over the years, generally with much smaller loan volumes, who fully anderstood why their company was in a crisis and were ready and willing to actively work on the reorganisation. This insight would be nice for some of the investment property traders who have bitten off more than they can chew.
pay the monthly leasing rates while, at the same time, we are restructuring the portfolio and cutting costs. I unfortunately still see a great difference to companies from the commercial and industrial sectors who are working more actively to save their companies. It would be nice, but rarely happens, if investors approach us when the first indications of difficulties appear and not when liquidity has dried up. When discus- sions start in this situation over a power of attorney for the realisation of assets, the negotiating positions
very well be that a number of institutions are prepared to repeat the same experien- ce made painfully by other colleagues in the past. That is slightly sarcastic. Restructuring is not a particularly pleasant course for any side. Where is the point where the bank needs to shift from a potentially difficult credit situation to the restructuring process? Gabriele Schiemer: This process is nearly always triggered by the customer, simply because he is unable to meet the interest payments. The bank must then react quickly to prevent the loan being classi- fied as default after 90 days – with all the negative consequences. We always try, as far as supervisory rules allow, to find a solution together with the customer. But extensive cooperation by the borrower is needed here, and that almost always happens much later than would be good for him and his company’s continued existence. The situation is particularly problematic with customers who refuse to anderstand the signs of the times and highlight their decision authority as the property owner, even though their portfolio is already economically attributable to the bank. Basically, banks prefer an out-of-court solution within the framework of legal and regulatory possibilities and want to realise the property through a structured process. That can take longer – even up to 24 months – and the time is then used to arrange a sale. Markus Fellner: Let me paint a picture here: A property owner holds “large-scale investments with low returns”. At times, the big numbers indicate that these investors have developed an “egocentric world view” and overestimated their role. I have never experienced a real estate
Gabriele Schiemer: I couldn’t agree more.
quickly become entrenched. As a rule, the next step is the appointment of an external CRO as restructuring manager. Markus Fellner: When an investor has taken the first mental hurdle, namely, to recognise the crisis, he next needs to make
The days when assets could re- main on the books for extended periods are over.
a paradigm shift. He must switch from intransparency to transparency and communicate openly with the financing banks. Both steps are difficult, but most people are successful in the end – the ones who do not, end up in a court-ordered bankruptcy. Markus Fellner: When an investor has taken the first mental hurdle, namely, to recognise the crisis, he next needs to make a paradigm shift. He must switch from intransparency to transparency and communicate openly with the financing banks. Both steps are difficult, but most people are successful in the end – the ones who do not, end up in a court-ordered bankruptcy.
– Gabriele Schiemer
Both Dr. Fellner and I are great fans of out- of-court solutions because they are more flexible and advantageous for all sides than a formal bankruptcy. But that only works when the owner anderstands the reality of the situation. If the restructuring means “business as usual”, it becomes difficult. It’s also necessary to accept and anderstand that, for example, company cars financed by the bank are no longer available because we aren’t prepared to
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