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How to increase the authorized capital of a bank with money and not violate the law?
This issue is of concern to many today. Usually, three methods are used: cost reduction (for example, a reduction in the number of branches and the development of Internet banking); transfer of non-core directions for outsourcing to the bank (for example, management of real estate, adopted on the balance sheet for the repayment of debts); systematic work to recover problem debts.
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Such actions give their results. The financial reports of banks of the 3rd group for the nine months of 2017 show an increase in income of $20 million as a result of working with bad debts.
How to reduce distressed debts – online installment loans no credit check
Among the typical scenarios for dealing with distressed debts: increasing the number of legal entities, selling portfolios of bad debts or transferring them to the management of AMC (asset management companies), outsourcing the services of legal companies.
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But in the process of working with bad debts, as a rule, there are obstacles. Inflexible bureaucracy and multitasking. In banks, often a soft-collective is engaged in one department, the trials are conducted by another, and the execution of court decisions is the third. Such a distribution of work with problem debts can be ineffective, since it is difficult to manage the process, and working with debtors requires a quick reaction. Banks on this often lose because of slowness and internal bureaucratic procedures.
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Re-registration of pledges. In the case of the sale of portfolios of “bad loans”, difficulties arise with re-issuing mortgages and with taxation if debts are sold at a discount or partially forgiven. Sometimes due to the long procedure of selling debts, the limitation period is missed, which excludes the possibility of collection in the future.
An advocate’s monopoly, which cuts the bank’s capacity independently or through AMC to collect debt in court. Since only lawyers can conduct cases in courts (only in the courts of first instance for the transitional period of 2018 cases can still be conducted by lawyers without attorney’s certificate). Most banks in the state do not have enough lawyers, and obtaining a lawyer’s certificate takes 9-12 months. This problem will be acute in 2019. Therefore, in 2018, working with bad debts, banks should weigh all the risks and benefits of options for dealing with problem loans.
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First, divide the affairs of problem loans into groups.
- up to $170 thousand – such cases do not require the participation of representatives of the bank in court;
- from $170 thousand to $880 thousand – participation in court is not obligatory, but at the request of the party the court can call representatives;
- from $880 thousand – participation of a representative is obligatory.
It is possible to save resources on conducting insignificant and uncomplicated cases (collection amounts up to $880 thousand) in terms of: in priority, the trials for which the limitation period expires or there are guarantors for whom the validity period of the guarantee expires. There may be court cases on the availability of assets / collateral. If there is a mortgage / pledge, then take it to the balance on the basis of reservations in the contracts. In 2017, the judicial practice was on the side of banks that formalized ownership of assets on the basis of mortgage reservations, and did not recognize it for themselves through the court. This is an extrajudicial defense, and you can do without litigation.
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On already initiated trials, review the possibility of accepting mortgages / pledges for a balance on the basis of a reservation. And if a pledge with a high risk of initiating a bankruptcy case (or it is already open), there are no assets, and debts do not generate income, then think about the expediency of spending resources on work with such a debt.
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Then evaluate for each group the opportunities of the legal department of the bank and decide: to work with the “problem” on their own, to sell a portfolio of problem loans or to transfer the issue of repaying debts for outsourcing.
If you work with legal companies (lawyer associations) on outsourcing, clearly record the result for which the advisor answers for you and demand a project plan for collection of debts for operative control of reference points at all stages. In December 2017 there is no limit on the costs of lawyers, which can be reimbursed at the expense of opponents, and you can recover from the debtor the amount of compensation for legal services.
If the legal department of the bank will work with a troubled debt, pay special attention to the preparation of statements of claim and evidence base. During the judicial reform, the order and rules for considering claims have changed. For example, evidence and calculations (justification of arrears, fines, penalties and calculation of court costs) must be submitted along with the statement of claim. If something is missed and not filed – to supplement the information will be almost impossible. As a result, there is a high risk of obtaining a negative court decision and, as a consequence, loss of assets.