Week 5

Question 1

Rebuilding trust in disstressed lending relationship: “it takes two to tango”

Answer 1

1. Company management should be aware that trust from restructuring bankers can be gained when the following conditions are met:
   - Important financiers are actively engaged in the turnaround process
   - Company management is able to quickly draw up and execute turnaroun dplan adressing strategic operational and financial measures
   - Relevant financial info is made available on time for bankers
   - The company actively seeks for affitional risk-bearing capital to strengthen the financial position of the company
2. Bankers should be open towards company managers on the decision making process regarding the conditions for transferring a compny to the restructuring department and the factors that lead to credit termination.
   - By doing this chances are company management acts more swiftly in the necessary direction to turnaround the company, rebuild trust and less chance of unwanted credit termination.
3. The more the opinions of company management and restructuring bankers on the casual attribution of the disstressed situation - internal vs external - are aligned, the higher the chance of trust and with that the chance of a continuity decision by bankers instead of focus on asset revocery. to allign opinions company management should be:
   - Aware of its own tendencies regarding the external attribution of the disstressed situation
   - Aware of the bankers tendency to come up with internal attributions.

• Both parties should be aware that addressin gthis issue in one-to-one communications helps in building trust.

4. Company management should use trust as a turnaround technique by managing the perception of its
   - Ability
   - Benevolence (Good will)
   - Integrity in an active way

If needed the company brings in external functional competences interpersonal competences xecutive skills and business sacvines

5. Company management should
   - Proactively communicate
   - Keep promises towards bankers
   The perception of integrity plays vital role in rebuilding trust.