Dual purpose trust
The Federal government and individual state governments have by now enacted a veritable cornucopia of legislative and economic measures. From the standpoint of lenders, however, these alone will not be sufficient. A loan continues to pose a risk with significant liability.
Being an entrepreneur is a challenge even during normal times. In the current crisis, however, many entrepreneurs are being pushed to the very limits of what is humanly possible. In addition to attending to their already demanding day-to-day business, they now have to keep an eye on a number of other things simultaneously: Their markets are suddenly falling apart, supply chains are rupturing and they have to come up with new ways to finance the enterprise. In this confused situation, entrepreneurs are at great risk of making wrong, half-hearted, or inadequate decisions.
Therefore, it is crucially important for both sides – borrower and lender – to turn to an orderly, stabilising force that, on the one hand, can take charge and stay on top of things and, on the other, is capable of providing hands-on support and assistance. The vehicle that meets this set of requirements is the dual purpose trust: The trustee temporarily takes over for the owner and implements the operational and financial measures necessary to build confidence until the borrower has surmounted the specific crisis facing it. At the same time, the trustee provides professional support by handing receivables management. The dual purpose trust thus ensures that the required restructuring and support measures are implemented in a professional and proper manner in the interest of both the lender and the borrower.