Why did the bank sell my loan?
Selling loans is a great way for banks to get their balance sheets in order in a very short time-frame. In the current environment, mainstream banks are tending to move on their impaired loans and sell to Private Equity firms, as opposed to taking haircuts and working them through with their borrowers.
This includes all types of loans across a wide range of sectors. Total loan sales in the UK and Ireland are now well in excess of €100 Billion and counting in the space of the last five years alone.
My loan has been sold, what happens next?
With a Private Equity Company now taking the lead, engagement with borrower will no longer be pedestrian in nature and can be difficult to make progress with. The new owner of your loan will be in contact with you within the first couple of weeks in an effort to determine what your plans may be.
It is inevitable that over the following weeks and months more and more letters will arrive at your front door looking for repayment proposals. In order to prevent any potential enforcement proceedings, engagement is essential.
It is imperative that you are fully prepared and have a plan in place. The new owners of these loans tend to be more aggressive than the original lenders in an effort to get a return on their investment. Therefore, it is incumbent upon you to get your head around the process very quickly.
Will the Private Equity firms support me?
The new owner of your loan is NOT A BANK!!!
They will have a completely different business model from the mainstream banks, and in general typically try to exit their position with you within the first twelve months. Subsequently, this means that they will want the debt repaid to them quickly with zero procrastination.
As they have little or no knowledge or interest within the varying sectors, that relationship and knowledge base that a borrower may have had with their existing bank and vice versa no longer exists or even matters.
Therein lies the problem. Given the varying complexities across all sectors, Private Equity firms should apply a degree of fairness in terms of how they propose to deal with the borrowers. For example, many of the loans that have been sold are held in very different structures and holdings. However, it appears that at present they are merely adopting a one-strand approach.
Due to liquidity problems in the marketplace, it is going to be very difficult for the borrowers to refinance their loans at this time. The result of this will be that many of the assets and businesses within this portfolio will likely have to be sold resulting in many of the borrowers losing what they have been working for and towards for many years. Hence the reason for you being proactive and creative in terms of trying to hold on to your assets long term.
How can we help?
Since 2010, GDP Partnership has helped 100’s of families, individuals and businesses deal with debt related issues. We have been leading the way in this specific area over the last few years. As a result, our team are more than ready to engage and assist if you have been affected by this.
We have particular expertise in dealing with private equity funds, and we would like the opportunity to share this with you. In the past 12 months, our team has been involved in over £150MM of refinancing deals involving private equity companies therefore we are well placed to help you in this regard.
Solutions are available and it can be quite empowering once one works out the different options open to them. Our team have significant experience in this area as we have restructured hundreds of millions of pounds worth of loans in the last seven years. We know what is expected and how to get you to where you want to go. In short, we WANT to hear from you today.