From Brink of Bankruptcy

FROM THE BRINK OF BANKRUPTCY … AN UNEXPECTED TURN AROUND

THE BACKGROUND

The client runs a small family business importing and exporting goods from the neighbouring ASEAN countries and has been doing it for 35 years. Being old school, he runs his business based on relationships and personal ties. He has used the same bank for all his financial needs over the last 45 years. Conservative in his borrowing, he has one commercial loan secured by a mortgage over his shop house; and a renovation loan (surprisingly, this was in the form of an overdraft facility) secured by his home.

 

THE PROBLEM

During the economic slowdown, his business took a hit, and cash flow became a problem. The client started to miss loan repayment instalments which amounted to $15,000 per month, paying them intermittently whenever he could. Each month he struggled to raise the funds required to pay the loan instalments which were overdue. Snowballing default interest became an insurmountable burden, overshadowing even his anxiety over his failing business.

 

WHY HE CAME TO SEE US

By the time he came to see us, he had received a letter of demand from his bank. They had threatened to foreclose on both loans. In addition, the bank’s employee who had served as his relationship manager over the last twenty years had recently left the bank. The new relationship manager taking over his account was not sympathetic – “new brooms sweeps client,” as the saying goes – the new manager’s prevailing concern was to reduce the bank’s exposure in a recession.

Having been backed into a corner and feeling overwhelmed, the client came to see us, not expecting any more in terms of legal services than to help him “buy” some time with the bank. Yet, at the same time, he was desperately looking for ways to raise the funds to stave off the repossession of his family home.

 

WHAT WE ACHIEVED

A quick investigation of our client’s borrowing history and current property valuations showed that –

  1. his residential property is valued at $2.3 million, and his shop house at $1.1 million (current valuations).
  2. that the client’s total debt to the bank is $900k, a mere fraction of the total worth of the mortgaged properties – our client was over-securitized!

We called our bankers, and within a few days, they offered to refinance his loan by giving him a NEW term loan secured by his residential property only.

As residential term loans bear much lower interest rates than an overdraft loan, the client’s liability to his new bankers was now reduced to a manageable $2,500 per month.

Our client was so relieved and heartened by his change of status that he could now focus his attention on his business. To help him ride out the recession, he was able to sub-let his shophouse for $7,000 per month.

As a result, from the brink of a bankruptcy action, our client now enjoys a fixed monthly income of $4,500!

Refinancing will help you reduce your monthly repayments and improve your quality of life. Speak to us over video consultation via Lawyer Anywhere for advice on refinancing your housing loan today!

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Susan Tan

Senior Legal Executive

Qualifications:

With more than 10 years of experience in the financial industry, Susan Tan, who joined us from one of the leading corporate and investment banks in Singapore, provides invaluable expertise and knowledge in corporate secretarial.

She is conversant and familiar with the local regulations and requirements for business entities in Singapore.

As a member of our team, Susan is responsible for maintaining and updating the Company’s statutory registers and records, filing all necessary documents and forms with the Accounting & Corporate Regulatory Authority (ACRA), Ad-hoc assignments such as allotment and transfer of shares, amendment of Company’s Constitution and submission of Annual Return to ACRA.

Apart from corporate secretarial work, Susan has considerable experience and expertise in compliance advisory matters, making her a valuable member of our firm.