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The Berkman Letter Practical analysis and commentary for business, law, and more.
Our company entered into a forbearance agreement with a lender and I am wondering how this will impact us.
Forbearance means that the company and the bank have agreed to postpone loan payments. This is typically due to the company being delinquent (late) on its payments and the parties negotiating to determine if and how the company can resume payments and avoid defaulting on the loan. In terms of how it will impact the company, it means that the company lacks enough cash to make its loan payments. If the company goes into default, the bank may be able to claim company assets in order to recover some or all of the owed funds (in the most extreme case, this could involve liquidating the company and selling its assets).