COVID-19 has been devastating for the hospitality industry. Hotel occupancy rates are still well below normal. While some lenders are still granting relief to borrowers, lenders increasingly have been foreclosing on properties.

What are the keys to a successful debt restructuring (or a Chapter 11 case) to avoid foreclosure? One, communicate early and often with your lender. Two, have a plan, and be prepared to present financial projections and a realistic path forward to your lender. Three, be willing to compromise in order to gain additional runway.

And finally, be prepared to explore other restructuring options if discussions with the lender do not provide the necessary flexibility to weather the pandemic-related distress and turn around operations.

This article also appears in HospitalityNet.

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