Commercial Lending Review articles from September 2002

Commercial Lending Review archives from September 2002

May you live in interesting times.
September 1, 2002... The old Chinese curse is upon us with a vengeance. Financial statement restatements. Fraud. Insider enrichment. Just when you think you've seen it all, a new scandal makes things more interesting. But wait. Like some financial statements,...

Financial accounting: does it add up?
September 1, 2002... Profit is an opinion, cash is a fact, or is it? Accounting problems represent a form of event risk. Formerly, accounting restatements had centered on smaller firms. The current wave involves larger firms like Enron, Tyco, Merck, and WorldCom....

Using life cycle analysis to evaluate borrowers' credit quality.
September 1, 2002... Three structural factors are dramatically affecting how a bank's commercial loan customers do business today: technology, globalization, and the growing importance of the customer-value imperative. Bank borrowers are being forced to redefine...

Waging the workout war: a short list of commandments.(guidelines for lenders and borrowers facing financial convenant defaults)
September 1, 2002... The Setting: Shattered expectations at the first meeting to discuss the upcoming financial covenant defaults. The shadow of a borrower's default under some of the financial covenants in its principal credit agreement severely darkens its...

Understanding leases: accounting issues.
September 1, 2002... The topic of accounting for leases has received a significant amount of attention in the accounting and business literature. Leasing has been, for many years, a popular way to finance the acquisition of various types of assets. As a result,...

Delegation or novation: an important distinction for lenders.
September 1, 2002... Whenever an existing loan is modified in such a way that additional people or entities become liable for repayment of the loan, the lender must be concerned with whether these new debtors are in addition to or in place of the original debtor....

FASB changes guidance on extinguishment of debt and clarifies accounting for lease modifications.(Financial Accounting Standards Board)
September 1, 2002... The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections," to...