There’s a quote attributed to 20th-century industrialist J. Paul Getty: “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
Never has there been a greater moment to test Getty’s thesis than the last 14 months.
After a few solid years of a borrower’s market, with lenders of all stripes clamoring over deals and sacrificing yield in the pursuit of deploying capital, the power balance swung at the onset of the COVID-19 pandemic and it looked like all the power in deals would be weighted heavily toward lenders. Absent a crystal ball, coronavirus clauses hadn’t been written preemptively into loan documents, raising the question of whether defaults and modifications would be treated differently and with more understanding than during the global financial crisis (GFC).
Read more in Commercial Observer.