Collecting delinquent loans is painstaking, time-consuming and emotionally draining work, but a productive learning experience for any banker. It is nearly always wise to first seek a cooperative approach in these situations. In cases where the relationship between bank and borrower is still workable, the bank may relent on some terms while the borrower cooperates. But if the client has given up, or the parties no longer trust one another, sometimes the best thing is to simply end it. No point pulling off a band-aid slowly. On one such occasion, when the business owner had all but walked away, we had little choice but to move in and get what we could from what was left of his assets.
On a four-way conference call with bankers, lawyers, and receivers, there was a feeling of dread in the local bank manager's office. We were being instructed in the step-by-step procedures for seizing the inventory, and thereafter, possibly personal assets. Lives would be impacted for years to come and the strategizing around all this was ominous. In the middle of this solemn telephone conversation, something caught my eye out the window.
In the view of the bank manager's office I saw a pod of killer whales frolicking in the harbour just a few hundred metres from us. Along with the bank managers and others in the room, I rushed to the window to take in the truly majestic sight.
Our pontificating experts - the men and women on the other end of the speakerphone - suddenly lost their audience. Ignoring them momentarily, we stood in the window, drinking in the incredible spectacle before us, literally turning our backs on the big bosses for something more compelling.
Our fascinating diversion was short-lived, and we quickly returned to the unpleasant job at hand. Years later I was working a different loan file that had been written off several years prior, to see if there was any value in pursuing the matter further. In this case, we held a judgment registered on an elderly client's home, and its legality was about to expire. The value of the home had now risen to the point where we could exercise our rights to force the sale of the home, and get a few dollars out of the man, then in his seventies.
I was always stricken by how little joy there was in collecting old written-off debts. We had long-since claimed the losses, and in the rare occasions where we got some of it back later, there was little appetite for celebration. It was late at night when I pulled his file. He was a neighbour. I drove by his house every day, and often saw him puttering around his yard. I knew that if I relentlessly worked the file, we might get a few dollars out of it, and take what little joy the man had left away from him. On the other hand, I could also just quietly slide the file back in the drawer and go home to help my wife put the kids to bed.
I saw the killer whales in my head, frolicking in the harbour and I heard the voice of an old banker who had advised me on such matters years before. "Is he driving a nicer car than me? If so, go get him. If not. Let it ride." My neighbour, the debtor, drove a rusty old white pick-up. The kids got a wonderful story that night about killer whales and Popeye and seahorses.
Then I slept peacefully.
I see clear parallels between lending and investing. In each case, there's a time to fight and a time to walk away.
Mark Ryan is an advisor with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
