Where are nonmonetary criteria, such as management ability, captured in the least-cost analysis?
Qualified lenders will have to develop measureable criteria for nonmonetary considerations and assign costs to them. These may then logically be incorporated into the least-cost analysis as subsets of the restructure criteria addressing the likelihood of debt repayment. For example, it is reasonable to recognize that a borrower’s managerial ability or ability to work out of existing financial difficulties is directly related to whether the debt is likely to be paid as scheduled. It is also reasonable to include the assessment of whether or not the restructure plan calls for applying all income—over and above necessary and reasonable living and operating expenses—to the payment of primary obligations into the criteria on debt repayment.
