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| SECTION G - ATTITUDES TOWARD FINANCIAL DIFFICULTY AND INSOLVENCY. |
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| [In this part we seek to discover underlying attitudes to debt;
financial difficulty; and insolvency as it affects both corporate
borrowers and lenders. The response to this section may, therefore,
be expected to be founded on general impressions.] |
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| G1. From the position of a corporate borrower. |
(a) If a corporate debtor is in financial difficulty, is there
an attitude of 'concealment' or 'denial' toward the admission
or exposure of that financial difficulty?
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Yes.
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(b) If so, is the reason for this based on cultural or other
factors?
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The reason is both cultural and economic reasons.
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(c) Is it likely that a corporate debtor would:
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(i) volunteer the fact of its financial difficulty to a
lender or group of lenders; or
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(ii) admit or concede it only if and when confronted by
a lender or group of lenders?
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Probably likely to disclose its financial difficulty when confronted
by the lenders.
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(d) If a corporate debtor is in financial difficulty, is it
likely that the corporate debtor would:
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(i) do nothing;
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(ii) seek expert assistance and advice; or
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(iii) accept the appointment by a lender of an outside expert/advisor?
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Seek expert assistance or advice.
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(e) If it was agreed between a lender and a corporate debtor
that an expert/advisor would be appointed, is it likely that a
corporate debtor would give the expert/advisor unrestricted access
to all relevant financial and other information regarding the
corporate debtor?
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Most likely.
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(f) In that situation, is it likely that the financial and
other information regarding the corporate borrower would be:
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(i) complete; and
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(ii) accurate (particularly regarding the valuation of assets
and the assessment of liabilities)?
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Satisfactorily complete and accurate but may not be completely
complete or accurate.
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| G2. From the position of lenders. |
(a) Is it more common that the financial difficulty of a corporate
borrower will be:
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(i) volunteered by a corporate debtor; or
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(ii) discovered by a lender (and, if so, how)?
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Probably by the lender from its own investigation.
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(b) If a lender becomes aware that a corporate debtor is in
financial difficulty, is it likely that the lender would seek
to investigate the financial crisis of the corporate debtor itself
and employ an expert/advisor to investigate the financial position?
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Most likely investigate on its own in the beginning and seek
outside advise at a later time if necessary.
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(c) If so, is the expert/advisor likely to be:
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(i) an independent professional; or
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(ii) an 'in-house' employee of the lender?
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Most likely an outside professional.
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(d) Is it likely that information regarding the financial
position of a corporate borrower as discovered from the work of
an expert/advisor would be:
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(i) kept secret from other lender/s or creditors;
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(ii) disclosed to other/selected lenders?
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Disclosed to other selected lenders.
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(e) If there were 2 or more lenders (not in a syndicate) involved
with the same corporate borrower, is it likely that they would:
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(i) join together to share information and endeavour to
work out a common approach to the financial problems of the
corporate borrower; or
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(ii) act secretly and independently of one another?
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Work together.
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(f) If there was a group of lenders (whether in a syndicate
or not) involved with the same corporate borrower, is it likely
that one of them would offer or seek to be the leader on behalf
of them all?
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Yes.
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(g) If so, is it likely that such a proposal would be agreed
to by the other lenders?
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Yes, after negotiations.
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(h) Is it likely that local lenders would have employees who
are experienced in informal work outs?
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No.
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(i) If there was foreign bank lending involved, is it likely
that domestic lenders would:
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(i) combine with; or
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(ii) act independently of the foreign lender/s?
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Work together.
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(j) Is it likely that 'junior' or 'minor' lenders might seek
to trade their debt?
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No.
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