Partner Ann Marie Uetz was quoted in The Wall Street Journal article, “In a Pandemic, Food, Booze and Guns Retain Value Best,” about considerations for lenders when valuing asset-backed loans amid the pandemic if they need to liquidate borrowers inventories to try to recoup money owed to them. Certain asset categories like food and beverages, pharmaceuticals and firearms had the lowest appraisal risk and markets for those products are forecast to stabilize in the coming months. Apparel and footwear had the highest risk of losing their value, with a low projected stabilization rate, while auto parts, building supplies and lumber were in between.
For lenders with no choice but to sell assets that backed their loans, speed is key. “Speed is critically important, as assets can deteriorate from fair market value, to forced liquidation value, and ultimately to scrap value, fairly quick,” said Uetz.