The SBA expects lenders to be just as diligent in liquidation and litigation for defaulted SBA loans as they would be for loans without a governmental guarantee. Some loans require prior approval from the SBA before they can be placed in liquidation status. We work with you to determine if that is required. If so, we can help you complete the necessary liquidation plan to submit to SBA beginning with the request to SBA to place the loan in liquidation status.
If SBA oversight is required, there are necessary steps that must be followed. We go through the required steps of preparing demand letters, attempting workout plans, analyzing whether an offer in compromise is appropriate and all details related to liquidation.
If liquidation is not the answer, we also assist with litigation. Depending on the nature of the litigation and expected cost, a litigation plan may need to be submitted to SBA for approval.
Approval is required when:
- There is a dispute over factual or legal issues.
- Legal fees are expected to be in excess of $10,000.
- If it appears the lender and the SBA have a conflict of interest.
- If the lender has made a separate loan, not a 7(a) loan, to the borrower.
In order to receive reimbursement for legal costs, detailed records, including hourly fees and itemization of work performed must be submitted to the SBA. We make sure all rules and regulations are closely followed in order to minimize the loss of the non-guaranteed portion of the loan, ensure that the guarantee is paid back in full by the SBA, and to maximize reimbursement of funds and expenses incurred due to the litigation.
At CGS Financial Services, LLC, we have experience in:
- Liquidating loans and seizing assets from companies who have defaulted on loans ranging from commercial real estate companies to light industrial manufacturing.
- Acting on behalf of lenders as workout specialists for debt restructuring.
- Establishing a receivership and acting as both federal and state receivers.