When a performing loan becomes a troubled credit
The first question is often what has changed: the borrower’s cash flow, the value or location of collateral, the reliability of financial reporting, or the willingness of an owner or guarantor to cooperate. We help lenders examine those changes alongside the loan documents and available remedies.
The objective is a workable decision: whether additional information, new terms, a reservation of rights, a forbearance arrangement or enforcement best protects the lender’s position.
Recovery requires more than a demand letter
Where fraud, asset conversion or insider misconduct has compromised a credit, Matthew works to reconstruct the movement of money and collateral, investigate guarantor and insider liability, and connect the recovery strategy to the available assets. The work may span investigation, forbearance, litigation, receivership and bankruptcy. We evaluate creditors’ remedies against the documents, the available collateral and the practical prospects for recovery.
Matthew’s article, Your loan officer’s AI chat history is Exhibit A, addresses the evidence and lender-liability risks that can arise when bankers use AI during credit management and workouts.
In the Glenwood State Bank litigation, Matthew represented the lender in pursuing recovery when other parties claimed ownership of the borrower’s equipment and the bank alleged transfers intended to frustrate collection.
Matters we handle
- Loan workouts, restructuring and forbearance arrangements.
- Default analysis and disputes over loan documents and guarantees.
- Loan participation and intercreditor disputes.
- Collateral disputes, asset tracing and suspected diversion of proceeds.
- Claims involving borrower fraud, insider transactions or conversion.
- Receiverships, assignments for the benefit of creditors, collection litigation and enforcement of judgments.
- SBA guaranty repair disputes and lender-liability defense.
- Creditor representation when a borrower files bankruptcy.
- Portfolio reviews to identify collateral defects and fraud, and drafting custom loan documents and disclosure templates.
A distressed commercial credit can require more than a collection action. Matthew evaluates receiverships and assignments for the benefit of creditors alongside enforcement and workout options, with attention to asset control, operating value, competing liens and distributions.
His banking work also includes SBA guaranty repair disputes, loan participation and intercreditor disputes, and lender-liability issues. These matters require close attention to the loan and participation documents, servicing history, collateral releases and the bank’s communications before and after default.
Agricultural lending
Farm credits add questions about crops, livestock, equipment, seasonal cash flow and the movement of collateral, including disputes with farm-product buyers, competing agricultural liens and grain-fronting arrangements. Our agricultural finance practice addresses those issues alongside workout planning and potential enforcement.
For disputes involving grain sold through another person or business, see our guide to grain fronting and agricultural collateral disputes.
Appellate experience in agricultural finance
Matthew’s work includes the published Lighthouse Management v. Oberg Family Farms appeal, which established a fact-specific grain-bin fixture test, and Star Bank v. Anderson, a nonprecedential decision affirming recovery involving grain fronting. These matters connect lending law to the ownership, movement and value of agricultural collateral.
Coordinating a workout with litigation or bankruptcy
Negotiation, state court remedies and bankruptcy proceedings can affect one another. We evaluate potential next steps in that wider setting. Where bankruptcy issues arise, Karl Johnson brings experience representing creditors, debtors and trustees.
What to have available
For a substantive discussion, useful materials usually include the loan and security documents, guarantees, payment history, recent borrower reporting and a short timeline. First contact the firm to arrange a conflict check and a method for sharing documents.
See Matthew Bialick’s background, our banking newsletter archive, and our guide to business debt and personal guarantees.