Navigating High-Risk ABL Relationships
Asset-Based Lending thrives on collateral monitoring and liquidity management. However, when an ABL borrower encounters operational distress, declining collateral values, or predatory junior debt, your collateral position and borrowing base can become rapidly compromised.
When a borrower slips into default or over-formula status, traditional options often feel limited: push for a forced liquidation, or hold your breath through a high-risk forbearance.
Turnaround Firm provides a powerful third option.
We act as a specialized third-party workout partner, intervening in distressed ABL scenarios to restructure junior liabilities, negotiate vendor support, control cash burn, and preserve the enterprise value of your borrower — protecting your senior position every step of the way.
How We Protect and Support Asset-Based Lenders
Eliminating Predatory Junior Debt & MCA Cash Drain
Stacking Merchant Cash Advances (MCAs) and high-cost alternative financing can quickly siphon off a borrower's cash flow, leading to missed payroll, vendor strain, and collateral degradation. We negotiate aggressive workouts and discounted settlements with junior creditors to halt daily cash sweeps and restore liquidity to the senior borrowing base.
Vendor & Supply Chain Stabilization
When trade creditors threaten to withhold key raw materials or inventory, or demand immediate COD terms, the value of your inventory and accounts receivable (A/R) drops sharply. We negotiate workout agreements and structured trade payments with critical vendors, keeping operations running and stabilizing the collateral backing your loan.
Over-Formula & Covenant Default Resolution
If your borrower is operating over-formula or in covenant default, we step in to execute a structured liability reduction plan. By shaving subordinated debt off the balance sheet, we improve debt-service coverage and return the credit facility to formula compliance, avoiding costly foreclosures or litigation.
Preserving Going-Concern Collateral Value
Liquidating collateral in a forced sale typically results in steep discounts on inventory and impaired A/R collections. By restructuring the balance sheet and stabilizing cash flow, we preserve the borrower's going-concern value, giving you a clear path to either full workout recovery, a strategic refinance, or an orderly exit.
Workout Support Built Around the Borrowing Base
Pre-Loan & Refinance Cleanup
Restructuring balance sheets prior to funding so new ABL facilities can take a clean first-priority lien position.
Special Assets Group (SAG) Support
Partnering directly with internal workout and special assets teams to handle complex junior debt negotiations.
Forbearance Agreement Alignment
Structuring debt workouts that run parallel to lender forbearance terms, ensuring milestones are met on schedule.
Subordination & Intercreditor Negotiations
Securing enforceable standstill agreements, debt subordination, and UCC release filings from junior lienholders.
Why Partner With Turnaround Firm?
The ABL Challenge
Junior lienholders threatening collection / sweeps
The Turnaround Firm Solution
Standstill agreements and negotiated debt settlements with full releases
The ABL Challenge
Impaired A/R due to vendor supply cutoffs
The Turnaround Firm Solution
Trade debt workouts to ensure ongoing supply chain operations
The ABL Challenge
Out-of-formula advance rates
The Turnaround Firm Solution
Subordinated liability reduction to lower debt burden and fix DSCR
The ABL Challenge
High cost & friction of forced liquidation
The Turnaround Firm Solution
Going-concern preservation to maximize senior facility recovery
Let's Discuss Your Portfolio Challenges
Whether you have a prospective borrower who needs balance sheet restructuring prior to closing, or a portfolio company currently in special assets, Turnaround Firm provides the tactical intervention needed to protect your capital.