Hard collection (“Hard-collection” stage) is continuation of Soft-collection stage within 31-90 days of the Customer’s past-due under the Contract and concerns measures fulfillment on regulating issues for debt repayment, approved by the parties on Soft-collection stage, and not fulfilled within 30 (thirty) days due to the causes that don’t depend on the parties (time factor). This stage is characterized by close contact with the Customer and relating persons, regulation of issues concerning debt repayment is permanently controlled by appropriate Units of the Bank (Risk Unit, Distressed Assets Recovery Unit, Security Unit), including fulfillment of provided tasks within precisely determined terms.
Units of the Bank involved in activity on “Hard-collection” stage
On this stage Distressed Assets Recovery Unit prepares an action plan on maximum efficient work with potential bad loan which is to be approved by the Board Member/ BLC and, if necessary, agreed with direct executors. Thus, Distressed Assets Recovery Unit are delegated authorities to fulfill organization-coordination functions, namely:
- Negotiations with the Customer and relating persons;
- Expertise of the property to be collateralized under the Contract and preliminary specification of its liquidity and value;
- Detail studying of the original materials of Credit file in order to determine risks for the Bank while choosing ways for repaying debt;
- Preliminary assessment of the financial standing of the Customer and his paying capacity;
- Correspondence with the Customer (requirements, claims concerning debt repayment);
- Involving of other units of the Bank (Business Unit, Risk Unit, Credit Analysis Unit, etc.) to conduct and maintain the planned measures and receive necessary information;
- Negotiations with the third parties (investors, potential collateral buyers, consulting and expert companies) in terms of repaying the debt.
Distressed Assets Recovery Unit, in virtue of received information, consolidates it, determines priority issues and takes instant measures.
Distressed Assets Recovery Unit provides a report on the state of the outstanding, taken measures, their consequences, and also proposals for further actions for the Board Member to which the Unit is subordinated, for Credit Committee and/or Bad Loan Committee, with further approval of proposed measures and their fulfillment.
The result of work on Soft-collection and Hard-collection stages is:
- Finding out of causes of potential bad loan;
- Analysis of financial standing of the Customer and group of relating persons, structure and perspectives of the business development;
- Providing of recommendations on changes of conditions of the Contract/ restructuring process/ further actions and introduction of control system over the Customer’s activity;
- Determination of value and liquidity of the collateralized property;
- Work with the Customer which will result in repayment of potential bad loan on these stages;
- Reaching of agreements with the Customer regarding debt repayment or neutralization of negative factors (including at the expense of the collateral), after being agreed by Bad Loan Committee;
- Resolving and approving of a list of further actions of the Bank concerning decrease of the bad loan level (change or increase of collateral, assignment of right of demand, agreement concerning refinancing of the outstanding in another bank, providing of additional guarantees, etc.);
- Making decision on introduction of measures stipulated by LEGAL stage;
- Making decision by Credit Committee concerning restructuring of potential bad loan;
- Approving of all measures to keep the collateral, etc.
Work with collateralized property
General control and organization of measures on keeping collateralized property on this stage are imposed on a manager of appropriate branch/Security Unit of the Head Office of the Bank.