What are the costs of restructuring and how are they determined?
Similar to the measureable standards lenders developed as part of their lending and loan underwriting polices, FCA regulations require qualified lenders to have measurable criteria in place to capture restructure costs. At a minimum, these criteria should allow the lender to assign a cost to those restructuring considerations listed in the regulation, including (1) the present value of foregone interest and principal made part of a restructure plan; (2) the administrative expense of processing a distressed loan restructure plan, including any additional time needed to research or acquire the necessary financial information if the borrower does not furnish current financial statements; and (3) any extraordinary efforts to service the restructured debt, such as additional staff hours or lost/delayed interest income resulting when the restructure plan does not show a likelihood of scheduled debt repayment. (Extraordinary efforts would generally be those considered to be beyond what is nor
