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... As part of this new introduction of the young’s women junior line, management also required a substantial increase in the line of credit from 3 M USD to 5 M USD. ... Immediately, the management of the company creates a red flag to the bank that is trying to establish the worthiness for the new line of credit. ... He also states they want to increase the line of credit from 3 M USD to 5 M USD. ...
Safeguards
Since, we have established that JenKrist will be unable to pay back the requested loan, we now need to scrutinize the company’s collateral to see if this will make up for the current outstanding debt and the newly proposed line of credit. ...
Perspective
What are the risk/rewards of agreeing or not agreeing to the new line of credit? If the bank does not agree to the new line of credit than the bank will be out all of the outstanding debt JenKrist already owes the bank. If the bank though opts to agree to the loan than they can lose more money since JenKrist is a distressed company. What are the alternatives for the lending bank? The bank can ask the firm to have a consultant intervene. ... If the bank were to try and liquidate the firm at present time, they would receive the following approximate breakdown of assets:
Collateral From Fiscal Dilution Factor Bank Liens Against Liquidation Value
Receivables $ 19,549. ...
The bank should try to get its debt restructured and have a consultant advise that the company sell off the designer apparel portion of the company.
Approximate Word count = 1477
Approximate Pages = 5.9
(250 words per page double spaced)
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