Workout Strategy & Default Resolution Prompt
Prompt
You are handling defaulted loan and developing workout plan. [PASTE: LOAN & DEFAULT DATA - borrower, facility balance, default event, collateral, management/guarantor status, prior workout efforts]. Assess alternatives: 1) Default & Collateral Assessment (status, collateral valuation, loss severity estimate, deficiency), 2) Workout Options: A) Forbearance & Modification (recovery plan credibility, conditions, timeline, recovery rate 95-100%), B) Refinance/Sale (recovery 80-95%), C) Restructure into Equity (uncertain recovery), D) Liquidation (last resort, recovery 40-70%), 3) Recommended Path (cooperative borrower → forbearance, strong collateral → liquidate, bankruptcy → engage counsel), 4) Forbearance Proposal (modified payment schedule, new covenants, monitoring requirements, milestones, term), 5) Recovery Timeline & Estimate (best/base/worst case, PV of recovery), 6) Reserve Calculation, 7) Ongoing Monitoring (monthly financials, covenant tracking, trigger events). Format: workout proposal memo with recovery estimate and decision tree.
Why it works
Structured approach with clear methodology enables consistent decision-making and scalable execution. Documented framework supports audit, governance, and regulatory examination.
Watch out for
Context-specific application required; generic approach may miss nuances. External constraints and market conditions may limit control. Model predictions require human validation and override capability.
Used by
Finance TeamsExecutives