What is a financial workout, and how does mediation fit in?

A financial workout is a negotiated restructuring of a borrower’s obligations that takes place outside of, or as an alternative to, a formal bankruptcy filing — for example, renegotiating the terms of a loan, restructuring debt, or arranging an orderly resolution between a company and its lenders. Because a workout depends entirely on the parties reaching agreement, a mediator can be valuable in bridging the gap between a borrower and one or more lenders, or among multiple creditors with different priorities. Mediation allows these sensitive financial negotiations to proceed confidentially and can preserve a business relationship and going-concern value that a contested default or foreclosure would destroy.