Calendar of Events

Contingent Liabilities: Three Lines of Defense

10/30/2017, 1:30 PM to 3:30 PM

No location provided

Amy Davis 601-948-6366


Contingent Liabilities: Three Lines of Defense

Presented by Richard Hamm
Monday, October 30th, 2017
1:30 pm - 3:30 pm CT

Lines of Defense:

  1. Full disclosure - including simple things like personal financial statement formats and other financial documents that contain clues to other contingent liabilities. 
  2. Developing a secondary or realistic liability which can emerge in the short term - going beyond the face amount of the guarantee (or other item), including: 
    • Understanding the full guarantee structure (guarantee percentage vs. ownership percentage)
    • Underlying cash flow and debt service coverage (DSC) of company or project/property as indicator of potential payment default, then any related collateral and/or reserves.
    • This section provides an assessment example using real estate projects.
  3. Understanding all related parties and the business balance sheet items among the parties
    • Various current receivables
    • Long-term or due from owners and how they arise
    • Other amounts due to owners (liabilities) and various levels or types of subordinated debt or liabilities
    • This section includes examples from financial statements and tax returns, plus issues with corporate "off balance sheet" items such as standby letters of credit and corporate guarantees.

Click here to register