Forbearance Agreement After a Commercial Default: What Business Owners Need to Know Under New York Law

A commercial default can put a business owner or commercial property owner under immediate pressure to make a decision, particularly when the loan documents, lender enforcement, or litigation involve New York.

When the lender responds with a forbearance agreement, signing can look like the quickest way to stop the situation from getting worse.

But a forbearance agreement is not necessarily a resolution.

It is an agreement under which the lender temporarily agrees to hold off on specified enforcement actions while the borrower satisfies the conditions set out in the agreement.

The underlying debt remains.

The original default does not simply disappear.

The agreement can also require the borrower to make important concessions in exchange for additional time.

That is why the period before signing matters.

If you have received a default notice or a lender-drafted forbearance agreement, this is the time to understand what triggered the default, what rights the

lender currently has, what rights you still have, and what the proposed agreement would change.

Once the agreement is signed, its acknowledgments, waivers, new covenants, reporting requirements, and other provisions can affect the borrower’s position going forward.

Three terms are especially important.

A forbearance agreement is a written contract in which a lender agrees, for a defined period and subject to specified conditions, not to exercise certain enforcement rights that can arise after a default. Depending on the loan documents and the agreement, those rights can include acceleration,

foreclosure, litigation, or enforcement against collateral. The underlying debt generally remains in place unless the agreement expressly modifies it.

An event of default is a condition identified in the loan documents that can give the lender contractual enforcement rights. A missed payment can be an event of default, but it is not the only one. Financial covenant violations, failure to maintain required insurance, unauthorized transfers, maturity defaults, and other breaches can also trigger default provisions depending on the documents.

A waiver of defenses is a provision that can require the borrower to give up specified defenses, offsets, counterclaims, or other arguments it otherwise could have asserted against the lender.

That provision deserves careful attention.

A lender-drafted agreement can also ask the borrower to acknowledge the outstanding debt, confirm that identified defaults occurred, release certain claims, accept new reporting requirements, or agree to additional default triggers.

Those terms should not be treated as routine language simply because they appear in a document labeled “forbearance.”

The real question is what the borrower receives in exchange for those concessions.

Is the forbearance period long enough to refinance?

Is there a realistic path to a loan modification?

Does the borrower need time to sell an asset?

Are there defenses under the original loan documents that should be evaluated before waiving them?

Can the business realistically comply with the new financial and reporting covenants?

And what happens when the forbearance period ends?

Answer those questions before signing the agreement.

Forbearance can be a useful tool after a commercial default.

But the agreement's value depends on its terms, the borrower’s financial position, and whether the additional time creates a realistic path to resolving the

underlying problem.

For a business owner facing a commercial default involving New York loan documents, enforcement, or litigation, the goal should not simply be to delay enforcement.

The goal should be to understand what the business is giving up, what it is receiving in return, and what must happen during the forbearance period for that additional time to matter.

What Is a Commercial Forbearance Agreement?

A commercial forbearance agreement temporarily limits specified lender enforcement actions while the borrower complies with the conditions set out in the agreement. It does not, by itself, eliminate the debt or guarantee a long-term resolution.

Understanding a forbearance agreement starts with understanding what it actually does.

After a commercial default, the lender can have rights under the loan documents to accelerate the debt, pursue collateral, begin foreclosure proceedings, or exercise other contractual remedies.

Through a forbearance agreement, the lender agrees not to exercise specified remedies for a defined period, provided the borrower complies with the agreement's terms.

The debt itself generally remains in place.

Principal, accrued interest, fees, and other obligations can still be owed under the loan documents and the terms of the forbearance agreement.

That is why forbearance should not automatically be treated as the solution to the underlying financial problem.

The additional time needs a purpose.

For one borrower, that can mean refinancing the debt.

For another, it can mean negotiating a permanent loan modification.

For a commercial property owner, it can provide time to market or sell an asset.

For a business facing broader financial pressure, the period can also provide time to evaluate restructuring options.

Singer Law Group approaches commercial real estate loan workouts with that larger picture in mind. A forbearance agreement can be one part of a broader workout strategy. Still, its value depends on whether the borrower can use the additional time to move toward a realistic resolution.

How a Forbearance Agreement Differs From a Loan Modification

A forbearance agreement and a loan modification are different tools.

A loan modification changes one or more terms of the underlying loan agreement.

Depending on the negotiated modification, that can include the interest rate, maturity date, payment schedule, amortization, or other financial terms.

A forbearance agreement generally does something different.

Instead of permanently changing the underlying loan terms, the lender agrees to temporarily refrain from exercising specified enforcement rights while

the borrower complies with the agreement's conditions.

That distinction is important.

A borrower can enter a forbearance period hoping that a permanent modification will follow.

Unless the agreement actually requires the lender to provide or negotiate a modification on specified terms, the borrower should not assume that outcome is guaranteed.

The forbearance period needs to be evaluated on its own terms.

• What does the lender agree not to do?
• How long does that agreement last?
• What does the borrower need to do during that period?
• What happens if the borrower misses one of those requirements?
• What happens when the period expires?
• And is there a realistic path from the temporary forbearance to a longer-term resolution?

Those questions help determine whether the agreement provides useful time or postpones enforcement.

Terms to Understand Before Signing a Forbearance Agreement

Several terms can shape what happens after a commercial default.

An event of default is a triggering condition defined by the loan documents.

The exact definition depends on the agreement.

A missed payment is one common example, but a commercial loan can identify other events as defaults, including covenant violations, failure to

maintain required insurance, unauthorized transfers, insolvency-related events, or failure to repay the loan at maturity.

An acceleration clause can allow the lender, after an applicable default and subject to the governing loan documents and legal requirements, to declare the outstanding debt immediately due instead of continuing to accept payments according to the original schedule.

That can change the problem quickly.

A borrower dealing with one missed payment can suddenly face a demand for the entire outstanding balance.

The forbearance period is the time during which the lender agrees to refrain from specified enforcement actions, provided the borrower satisfies the agreement's conditions.

No single period works for every commercial borrower.

The appropriate length depends on what the borrower is trying to accomplish.

If refinancing is the intended exit, the period needs to account for a realistic refinancing process.

If the plan is an asset sale, the borrower needs enough time to market the asset, negotiate the transaction, complete diligence, and close.

If the goal is a permanent loan modification, the agreement should provide enough time for meaningful negotiations and whatever financial review the

lender requires.

A short period that expires before the proposed solution can realistically be completed can leave the borrower facing the same default after giving the lender additional acknowledgments or concessions.

What Triggers a Commercial Lender’s Right to Demand Forbearance

Forbearance discussions generally begin after the lender believes an event of default has occurred.

Confirm the specific trigger against the original loan documents rather than assuming it from the lender’s default notice alone.

Common issues can include a missed principal or interest payment, breach of a financial covenant, failure to maintain required insurance, unauthorized

debt or transfers, or a maturity default when the loan comes due and the borrower cannot repay or refinance it.

For commercial real estate borrowers, financial covenants can also become important.

A loan can require the property or borrower to maintain specified financial conditions, reporting requirements, liquidity levels, or debt service metrics.

Before accepting the lender’s description of the default, the borrower should identify the exact provision involved.

• What does the loan agreement require?
• Did the triggering event actually occur?
• Was notice required?
• Did the loan agreement provide a contractual opportunity to cure?
• Did the lender follow those requirements?
• Are there multiple alleged defaults, or is the lender addressing one specific issue?

Those questions matter most if the proposed forbearance agreement asks the borrower to acknowledge the default formally.

The Forbearance Period Needs a Job

The most useful way to evaluate a commercial forbearance agreement is to ask what the additional time is supposed to accomplish.

“Forbearance” by itself is not an exit strategy.

If the borrower needs six months to complete a realistic refinancing process, an agreement that provides substantially less time may fail to solve the underlying problem.

If the borrower expects a loan modification, the agreement should be reviewed to determine what, if anything, the lender has actually committed to regarding that process.

If the business is experiencing broader financial distress, the borrower should also understand whether the forbearance period provides enough time to evaluate restructuring alternatives before enforcement resumes.

The agreement needs to be evaluated against the borrower’s actual plan.

The question is not simply whether the lender is willing to wait.

The question is whether the borrower can use that time to get somewhere.

A commercial forbearance agreement can provide valuable breathing room after a default.

But the value is in what the borrower can realistically accomplish before that period ends.

What Are You Giving Up When You Sign a Commercial Forbearance Agreement?

A lender-drafted commercial forbearance agreement can require the borrower to acknowledge the debt and default, waive specified defenses or claims, and accept new obligations in exchange for a temporary pause in enforcement. Those provisions deserve careful review before signing the agreement.

When a business owner receives a forbearance agreement, the immediate focus is often on what the lender is offering.

More time.

A pause in foreclosure.

A delay in acceleration.

Additional time to refinance, sell an asset, negotiate a modification, or address the default.

But the other side of the agreement matters just as much.

What is the borrower being asked to give up in exchange for that time?

A lender-drafted forbearance agreement can ask the borrower to confirm the amount owed, acknowledge identified defaults, waive specified defenses, release claims, accept additional covenants, provide more frequent financial reporting, or agree to new events of default.

Those provisions can affect the borrower’s position if the workout ultimately fails.

That is why the agreement should be reviewed as more than a temporary payment arrangement.

The borrower needs to understand both sides of the exchange.

Waiver of Defenses: What It Means and Why It Matters

A waiver-of-defenses provision can require the borrower to relinquish specified legal arguments, defenses, offsets, counterclaims, or claims that otherwise could become relevant if the lender later pursues enforcement.

The scope of the waiver depends on the agreement's language.

You need to read that language carefully.

Potential issues under the original loan documents can include whether the lender complied with applicable notice and cure provisions, whether it

properly credited payments, whether it declared the default in accordance with the agreement, or whether another contractual issue affects the lender’s

asserted rights.

The existence and strength of any particular defense depend on the loan documents and facts.

But the important point comes earlier.

Identify those issues before the borrower signs an agreement containing a waiver.

Once a borrower has signed language acknowledging the debt and default while waiving specified defenses or claims, challenging the lender later can become substantially more difficult.

That makes the timing of the legal review important.

The borrower should not wait until enforcement resumes to ask what defenses existed before signing the forbearance.

Understand Exactly What the Waiver Covers

Not every waiver is written the same way.

Some provisions focus specifically on defenses to the identified default.

Others may use broader language covering claims, counterclaims, offsets, causes of action, or conduct occurring before the agreement was signed.

A borrower should understand the scope.

• Does the waiver apply only to the specific default being addressed?
• Does it extend to other disputes involving the loan?
• Does the agreement include a release of claims against the lender?
• Does the release extend to the lender’s agents, servicers, affiliates, attorneys, or other parties?
• Is the borrower making representations about the lender’s prior conduct?
• Are guarantors being asked to provide separate acknowledgments or releases?

These are not details to address after signing.

They are part of deciding whether the proposed agreement makes sense in the first place.

The borrower should understand exactly what rights they are surrendering and what the lender is providing in exchange.

Acknowledging the “Specified Default”: Risks of Overbroad Language

A forbearance agreement will generally identify the default or defaults that caused the lender to consider enforcement.

That language is often defined as the “Specified Default.”

The definition matters.

A borrower can receive a default notice addressing one issue and then receive a proposed forbearance agreement containing broader language.

Before signing, compare the agreement with the original default notice and the underlying loan documents.

What default did the lender originally identify?

What default is the borrower being asked to acknowledge?

Are those descriptions the same?

Does the proposed definition include additional covenant breaches or defaults?

Is the borrower being asked to confirm facts that have not been independently reviewed?

The borrower should not assume that the lender’s definition is simply a summary of the earlier notice.

Read it as a contractual acknowledgment.

If the language goes beyond the issue that led to the forbearance discussions, the parties should identify that difference before executing the agreement.

The Debt Acknowledgment Deserves the Same Attention

Forbearance agreements can also contain an acknowledgment of the outstanding debt.

The borrower can be asked to confirm principal, accrued interest, default interest, fees, expenses, or other amounts claimed by the lender.

Do not treat those numbers as background information.

Compare them with the borrower’s records.

Review the payment history.

Determine how payments were applied.

Check whether default interest or other charges have been added.

Understand what amounts the borrower is being asked to acknowledge.

If there is a disagreement, identify it before signing a provision confirming the lender’s calculation.

The same principle applies to guarantors.

If a guarantor is being asked to acknowledge liability or reaffirm obligations as part of the forbearance, those provisions deserve their own review.

New Covenants and Reporting Obligations That Create Additional Default Triggers

A forbearance agreement can impose obligations that were not part of the borrower’s ordinary operating routine before the default.

Those requirements can include more frequent financial statements, cash-flow reporting, minimum liquidity requirements, restrictions on additional debt,

limitations on asset transfers, lender approval requirements, updated rent rolls, budgets, or other financial information.

The borrower needs to determine whether it can actually comply with those obligations.

A reporting requirement that looks manageable on signing day can become a problem if the business lacks the staff, accounting systems, or financial information needed to meet it consistently.

The same is true for financial covenants.

Agreeing to maintain a particular cash balance or financial metric does not help the borrower if its existing cash flow makes compliance unrealistic.

Before signing, identify every new obligation and ask:

What does the borrower need to provide?

When is it due?

Who inside the company is responsible?

Can the business realistically comply?

Is there a cure period if something is missed?

What happens if the requirement is breached?

Does the lender have to provide notice before terminating the forbearance?

The answers should be clear before the agreement becomes binding.

A Forbearance Agreement Can Create New Ways to Default

This is one of the most important practical points for a commercial borrower.

The original loan documents created one set of obligations.

The forbearance agreement can add another.

A borrower who entered forbearance because of a payment default can later face a separate problem because it missed a reporting requirement,

violated a new covenant, failed to meet a milestone, or did not satisfy another condition imposed by the forbearance agreement.

That is why the agreement needs to be evaluated operationally, not just legally.

The business should be able to comply with what it is promising.

If a requirement is unrealistic, address it during negotiations.

Understand the Exchange Before You Sign

A useful forbearance agreement should give the borrower enough time and flexibility to pursue a realistic solution.

But that additional time can come with meaningful concessions.

Before signing, identify those concessions.

What defenses or claims are being waived?

What defaults are being acknowledged?

What debt amount is being confirmed?

What new covenants are being accepted?

What reporting obligations are being added?

What happens if the borrower misses one of them?

And what is the lender agreeing to do in return?

The borrower should be able to answer all of those questions before deciding whether the agreement provides a workable path forward.

The point is not that a waiver, acknowledgment, or new covenant automatically makes a forbearance agreement a bad deal.

The point is that those provisions have consequences.

A business owner should understand those consequences before exchanging existing rights for additional time.

How Do New York Courts Treat Commercial Forbearance Agreements?

A signed commercial forbearance agreement can become an important part of a lender enforcement dispute in New York. Courts closely review the

agreement's language, including acknowledgments of default, releases, waivers, and the conditions the borrower agreed to satisfy.

A commercial borrower should not sign a forbearance agreement assuming that unfavorable provisions can simply be challenged later if the workout fails.

The written agreement matters.

When a dispute reaches court, the borrower and lender can be dealing with more than the original loan documents.

A second agreement can now be in the record in which the borrower acknowledged specific facts, accepted additional obligations, and agreed that the lender would refrain from certain enforcement actions only while particular conditions were satisfied.

That can change the legal landscape.

For a borrower considering a forbearance agreement, the better time to identify potential problems is before those provisions become part of the signed record.

Why the Written Terms Matter

Commercial forbearance agreements are contracts.

That means the specific language matters when a dispute later develops over what the lender or borrower was permitted to do.

A court may consider the original loan documents, the event of default, the default notice, the forbearance agreement, the parties’ performance under that agreement, and the enforcement action that followed.

For the borrower, several provisions can become particularly important:

The acknowledgment of the outstanding debt.

The definition of the Specified Default.

Any waiver of defenses.

Any release of claims.

New financial or reporting covenants.

Events that terminate the forbearance.

Notice and cure provisions.

The lender’s remedies after termination or expiration.

Those provisions should work together clearly.

A borrower should understand not only what each provision says individually, but also how the provisions affect one another if the business cannot

complete its intended workout.

Seeking a Preliminary Injunction After Signing a Forbearance Agreement

A borrower facing imminent enforcement can consider whether there is a legal basis to ask a New York court for preliminary injunctive relief.

But a preliminary injunction is not automatic.

The party seeking that relief generally needs to establish the requirements New York law imposes for a preliminary injunction, including a likelihood of success on the merits, irreparable injury without the requested relief, and a balancing of the equities in its favor.

That analysis depends heavily on the facts.

A signed forbearance agreement can become important because the court can consider what the borrower already acknowledged or agreed to when evaluating the underlying dispute.

For example, a borrower can face a harder argument if it signed an agreement acknowledging the debt and specified default, and later tries to take a position inconsistent with those acknowledgments.

That does not mean every signed forbearance agreement eliminates every possible challenge.

It means the language can materially affect the borrower’s position.

This is one reason legal analysis should happen before signing, not for the first time when enforcement is already underway.

Enforceability of Waiver-of-Defenses Provisions Under New York Law

A waiver of defenses can have serious consequences in a commercial lending dispute.

The effect of a particular waiver depends on its language, the surrounding agreement, the circumstances of its execution, and the legal issues involved.

A borrower should therefore avoid assuming either that the waiver is meaningless or that it necessarily eliminates every possible argument.

The provision needs to be read.

• What defenses are being waived?
• What claims are being released?
• Does the language apply only to conduct that occurred before the agreement?
• Does it cover the lender’s future conduct?
• Are guarantors also providing releases or waivers?
• Are there exceptions?
• Does the agreement contain representations that the borrower has no defenses, offsets, or counterclaims?

These details matter because a lender can later rely on the signed agreement as part of its enforcement position.

Singer Law Group’s commercial real estate law practice addresses these issues in the broader context of commercial loan documents, defaults, workouts, and enforcement disputes.

For the borrower, the goal before signing is to understand exactly what rights are affected and whether the proposed waiver goes beyond what's needed to address the immediate default.

New York’s Commercial Foreclosure Process Affects the Negotiating Timeline

Commercial mortgage foreclosure in New York generally proceeds through the courts.

That matters when evaluating a lender’s proposed forbearance agreement.

A commercial foreclosure is not simply an administrative step that transfers the property immediately after a default.

The lender generally needs to commence a foreclosure action and proceed through the judicial process before a foreclosure sale can occur.

The exact timeline depends on the facts, the loan documents, the defenses and issues raised, the court, and the course of the litigation.

For a borrower, that does not mean there is unlimited time.

It means the borrower should understand the enforcement timeline before giving up rights in exchange for a specific forbearance period.

If the lender is offering a short forbearance period, the borrower should ask what that period actually accomplishes.

• Does it provide enough time to refinance?
• Does it allow meaningful modification negotiations?
• Can a proposed property sale realistically close?
• Does the business need to evaluate a restructuring?
• Are important deadlines approaching under the loan documents or proposed forbearance agreement?

The answers help determine whether the proposed period provides useful time.

The Negotiating Opportunity Comes Before the Agreement Is Signed

The period after default but before a forbearance agreement is executed can be important for both sides.

The lender has an interest in addressing a default and determining whether a consensual resolution is realistic.

The borrower has an interest in obtaining enough time to pursue a workable exit while preserving rights that still matter.

That creates a negotiation.

The borrower should not assume every provision in the lender’s first draft must remain unchanged.

The parties can discuss the length of the forbearance period.

Reporting obligations can be examined.

The Specified Default definition can be reviewed.

Notice and cure provisions can be addressed.

Waiver and release language can be evaluated.

Milestones can be tied to a realistic timeline for refinancing, modification, sale, or restructuring.

Whether the lender agrees to a requested change depends on the circumstances and the negotiation.

But those issues are much easier to address before the borrower has signed the lender’s proposed language.

Do Not Wait for Enforcement to Analyze the Agreement

Once enforcement begins, the borrower is responding to a different problem.

Instead of negotiating what a proposed forbearance agreement should say, the business can be defending against foreclosure or another enforcement

action while dealing with a document it has already signed.

That is a weaker time to discover that the forbearance period was too short, the reporting obligations were unrealistic, the Specified Default was broader than expected, or the waiver language affected arguments the borrower wanted to preserve.

A commercial default does not necessarily mean the borrower has no options.

But you need to identify the options while there is still time to use them.

Before signing a commercial forbearance agreement, understand the original loan documents, the alleged default, the lender’s existing remedies, the concessions in the proposed agreement, and the realistic paths available to resolve the debt.

The objective is not simply to postpone enforcement.

It is to use the available time to move toward a solution the business can actually execute.

What Happens When the Forbearance Period Expires?

When a commercial forbearance period expires without a resolution, the lender can resume exercising the enforcement rights that were temporarily held back, subject to the loan documents, the forbearance agreement, and applicable law.

This is where the temporary nature of forbearance becomes important.

The agreement did not necessarily restructure the debt.

It did not automatically extend the maturity date.

It did not guarantee a refinancing or loan modification.

And unless the agreement says otherwise, it does not require the lender to continue negotiating after the forbearance period ends.

The lender agreed to refrain from specified enforcement actions for a defined period.

If that period expires without a longer-term resolution, the borrower can once again face acceleration, foreclosure, litigation, enforcement against

collateral, or other remedies available under the governing documents.

The exact rights and notice requirements depend on the loan documents and the forbearance agreement.

That is why you need to understand the expiration provisions before signing the agreement.

What happens on the final day?

Does enforcement resume automatically under the agreement?

Is additional notice required?

Is there a cure period for a breach of the forbearance agreement?

Can the period be extended?

What conditions need to be satisfied for an extension?

Has the lender committed to continue modification discussions?

Those questions should be answered at the start of the forbearance period, not as the deadline approaches.

The Borrower’s Position Can Be Different After Forbearance

A borrower can enter a forbearance agreement with one set of rights and emerge from an unsuccessful forbearance period with a different contractual record.

During the process, the borrower could have acknowledged the debt, confirmed a Specified Default, agreed to additional covenants, provided updated financial information, or waived specified defenses or claims.

Those provisions can become relevant if enforcement follows.

That does not mean a borrower has no options after forbearance expires.

It means the borrower should understand that the agreement itself can shape the lender’s enforcement position.

The better approach is to use the forbearance period actively.

If the plan is refinancing, the refinancing process should already be moving.

If the goal is a modification, the borrower should know what information the lender requires and what issues remain unresolved.

If an asset sale is the exit, the business should understand what needs to happen before closing.

If the company’s financial problems extend beyond one loan, it should evaluate restructuring alternatives before the deadline creates another crisis.

At that stage, a borrower should evaluate options based on the loan documents, the status of the default, the property or business involved, and available financial alternatives.

Realistic Exit Paths: Refinancing, Loan Modification, Asset Sale, or Bankruptcy

A forbearance period only has value if the borrower can use the additional time to pursue a realistic next step.

There are several possible paths.

• Refinancing: The borrower replaces the defaulted loan with financing from another lender. Whether refinancing is realistic depends on factors such as the borrower’s financial condition, collateral value, cash flow, credit profile, the existing default, and the new lender's requirements. The process can involve underwriting, valuation, due diligence, documentation, and closing conditions, so the forbearance period should account for the work required.
• Loan modification: The borrower and existing lender negotiate permanent changes to the loan. Depending on the situation, those changes can involve the maturity date, payment schedule, interest terms, amortization, covenants, or other provisions. A modification requires lender agreement, and the lender can require updated financial information, projections, valuations, or other documentation before deciding whether to proceed.
• Asset sale: The borrower sells the commercial property or other assets and uses the proceeds to resolve the debt. The amount of time required depends on the asset, market conditions, diligence, financing, approvals, negotiations, and closing requirements. If an asset sale is the intended exit, evaluate the proposed forbearance period against a realistic transaction timeline.
• Bankruptcy or restructuring: When the financial problem extends beyond a temporary payment issue, a bankruptcy or restructuring analysis can become relevant. The appropriate chapter and potential effect of a filing depend on the borrower, its debts, assets, creditors, guarantees, and overall financial circumstances. Evaluate bankruptcy as a legal and financial restructuring option, not as the first response or the last resort.

These paths are not interchangeable.

A business with a near-term refinancing opportunity has a different problem from a commercial property owner that needs time to sell.

A company facing pressure from several creditors has a different problem from a borrower dealing with one maturity default.

The forbearance agreement should reflect the actual situation.

Why a Short Forbearance Period Can Be a Problem

The forbearance period should be tied to what the borrower is realistically trying to accomplish.

A short period can look helpful because it postpones immediate enforcement.

But if the borrower cannot complete the intended exit within that window, the additional time can have limited practical value.

Consider a borrower pursuing refinancing.

The business can need time to prepare financial information, approach lenders, obtain a term sheet, complete underwriting, satisfy diligence requests,

address valuation issues, negotiate documents, and close.

The appropriate timeline depends on the transaction.

The same principle applies to a commercial property sale.

Marketing the property, negotiating a purchase agreement, completing diligence, satisfying closing conditions, and reaching closing can require considerably more work than simply finding an interested buyer.

A loan modification has its own timeline.

The lender may require financial statements, cash-flow information, projections, updated valuations, guarantor information, or other materials before deciding whether to change the loan terms.

The borrower should therefore work backward from the intended solution.

What needs to happen?

Who needs to approve it?

What documents are required?

What third parties are involved?

What could delay the process?

How much time does the business realistically need?

Then compare that timeline with the period offered in the lender’s draft.

Do Not Sign a Timeline the Business Cannot Use

A borrower should be cautious about accepting a proposed forbearance period simply because the lender describes it as standard.

The relevant question is whether the period works for this borrower and this exit strategy.

If it does not, address the issue during negotiations.

The borrower can present the lender with a concrete plan.

If refinancing is underway, identify the remaining steps.

If the property is being sold, explain the transaction process.

If a modification is being pursued, identify the financial information already provided and the issues still being negotiated.

A documented plan gives the parties something more useful to discuss than an arbitrary number of days.

The lender is not guaranteed to agree to the requested period.

But the borrower should know what it needs before deciding whether the proposed agreement gives it enough time to accomplish anything meaningful.

Start Working on the Exit Before the Agreement Is Signed

The forbearance period should not be the point when the borrower begins thinking about what comes next.

That planning should already be underway.

If refinancing is the goal, start evaluating financing options.

If a sale is necessary, understand the steps and timing involved.

If the borrower wants a permanent modification, identify what financial information the lender needs and what terms would make the debt sustainable.

If the business is dealing with broader financial distress, evaluate restructuring alternatives while there is still time to make a deliberate decision.

Forbearance can create breathing room.

What matters is what the borrower does with it.

A well-structured agreement should provide enough time to pursue a credible solution while preserving as much flexibility as the circumstances allow.

The goal is not to reach the end of the forbearance period and ask what happens next.

The goal is to reach that date with the next step already in place.

Forbearance vs. Bankruptcy: Comparing Your Options Under New York Law

A forbearance agreement and bankruptcy address creditor pressure in very different ways. Forbearance is a negotiated agreement with the lender. A bankruptcy filing can trigger the federal automatic stay, which generally restricts many covered collection and enforcement actions while the bankruptcy case is pending.

Commercial borrowers sometimes treat forbearance and bankruptcy as opposite choices.

They are better understood as different tools.

A forbearance agreement depends on an agreement between the borrower and lender. The lender agrees to refrain from specified enforcement actions for a defined period, and the borrower agrees to comply with the forbearance agreement's conditions.

Bankruptcy operates under federal law and court supervision.

Depending on the borrower and the circumstances, Chapter 11 or another available bankruptcy option can provide a framework for addressing creditor claims, restructuring debt, dealing with burdensome obligations, and determining how the business moves forward.

The right path depends on the borrower’s financial condition, the nature of the default, the creditor structure, available assets, guarantees, cash flow, and whether a realistic path exists to resolve the underlying debt.

The Automatic Stay vs. Contractual Forbearance: Key Differences

A contractual forbearance lasts only as long as the agreement provides and remains subject to its conditions.

If the borrower violates a covenant, misses a required payment, fails to provide financial information, or otherwise triggers a termination provision, the lender can regain enforcement rights according to the agreement and applicable law.

The automatic stay works differently.

When a bankruptcy petition is filed, the automatic stay under 11 U.S.C. § 362 generally takes effect and restricts many collection and enforcement actions against the debtor or property of the bankruptcy estate.

That can include certain foreclosure activity, collection litigation, and enforcement of prepetition judgments.

But the stay is not absolute.

Its scope depends on the circumstances, and creditors can ask the bankruptcy court for relief from the stay when a legal basis exists.

The key distinction is that the automatic stay arises from federal bankruptcy law, not a lender’s voluntary agreement to temporarily refrain from

enforcement.

For a commercial borrower, that difference matters when negotiations stall, or the company deals with more than one creditor.

A forbearance agreement generally addresses the relationship with the lender that signed it.

A bankruptcy case can address a broader financial structure.

When Chapter 11 Reorganization Can Be Considered Instead of Forbearance

Forbearance can make sense when the borrower has a temporary problem and a realistic path to resolving it.

For example, a borrower can need additional time to close a refinancing, complete an asset sale, or finish negotiations over a permanent loan modification.

Chapter 11 becomes a different option when a business needs a court-supervised restructuring rather than additional time from one lender.

Through Chapter 11 bankruptcy, an eligible small business can seek to reorganize its financial obligations under the Bankruptcy Code.

Depending on the circumstances and applicable bankruptcy law, the process can allow the debtor to address creditor claims, evaluate burdensome contracts or leases, propose a reorganization plan, and operate under the protections and requirements of the bankruptcy system.

That does not make Chapter 11 automatically preferable to forbearance.

Bankruptcy has costs, disclosure requirements, court oversight, procedural obligations, and business consequences to consider.

The question is whether the business’s financial problem can realistically be resolved through a consensual workout or whether it needs a broader restructuring framework.

A borrower dealing with one commercial mortgage and a near-term refinancing opportunity can reach a different conclusion from a company facing several MCA funders, tax obligations, trade creditors, litigation, and a commercial loan default at the same time.

The financial picture matters.

A Forbearance Agreement Does Not Provide the Same Protection as the Automatic Stay

A lender’s promise to forbear is a contractual promise.

The agreement determines its scope.

If the agreement says the lender will refrain from foreclosure but does not address another remedy, the borrower should not assume that every possible form of enforcement has been suspended.

The automatic stay is statutory.

When applicable, it generally restricts covered creditor actions without requiring each creditor to agree to those restrictions separately.

That difference can be important for a business facing pressure from several directions.

Suppose a commercial borrower negotiates a forbearance agreement with its mortgage lender.

That agreement does not automatically bind an unrelated judgment creditor, MCA funder, landlord, taxing authority, equipment lender, or other creditor that is not a party.

A bankruptcy filing can create a broader framework for addressing creditor activity. However, the scope of the stay and the treatment of each creditor depend on bankruptcy law and the facts of the case.

Forbearance can therefore solve a specific lender problem without solving the company’s larger balance-sheet problem.

Before signing, the borrower should know which type of problem it actually has.

Subchapter V Bankruptcy for Small Business Borrowers Facing Financial Pressure

Some small business debtors can qualify for Subchapter V of Chapter 11.

For eligible businesses evaluating Subchapter V bankruptcy in New York, the process provides a more streamlined form of Chapter 11.

Eligibility depends on the statutory requirements in effect when the case is filed, including the applicable debt limit and the nature of the debtor’s

obligations.

For an eligible business, Subchapter V can provide a restructuring framework with procedures that differ from a traditional Chapter 11 case.

The debtor generally remains in possession of its business. At the same time, a Subchapter V trustee is appointed to perform the duties established by the Bankruptcy Code, including facilitating a consensual plan where possible.

The plan process also differs from traditional Chapter 11.

Under the appropriate circumstances and if the statutory requirements are satisfied, a court can confirm a Subchapter V plan even without acceptance by every impaired class.

That can matter when a business has a viable operation but cannot obtain unanimous creditor support for a consensual restructuring.

Subchapter V is not simply a substitute for every commercial forbearance agreement.

The borrower still needs to determine whether it qualifies, whether bankruptcy is appropriate, whether the business can support a feasible plan, and how secured debt, guarantees, leases, taxes, and other obligations affect the restructuring.

Make the comparison before the borrower gives up important rights under a forbearance agreement.

Bankruptcy Needs to Be Evaluated in the Context of the Entire Business

A commercial loan default rarely exists in isolation when a business is experiencing serious financial distress.

The borrower can also be dealing with vendor debt, merchant cash advances, tax obligations, leases, judgments, personal guarantees, or other secured and unsecured claims.

That larger picture can change the analysis.

If the company has a viable business and the immediate problem is a single maturity default, a negotiated loan workout can provide the right solution.

If several creditors are taking enforcement action at the same time, solving only the commercial loan problem can leave the company exposed elsewhere.

This is why a borrower should prepare a complete financial picture before choosing between forbearance and restructuring.

• What does the company owe?
• Who holds collateral?
• What guarantees have been signed?
• What lawsuits or judgments exist?
• How much cash does the business need to keep operating?
• What obligations are coming due?
• Is the underlying business profitable before debt service?
• Is a realistic refinancing or sale possible?

Those questions help determine whether the company needs time from one lender or a broader restructuring strategy.

Can You File Bankruptcy After a Forbearance Agreement Expires?

In appropriate circumstances, a borrower can still consider bankruptcy after a forbearance period expires.

But waiting until expiration can make the decision more difficult.

The borrower may face renewed enforcement while trying to understand bankruptcy options under significant time pressure.

A prior forbearance agreement also needs careful review.

The borrower could have acknowledged the debt, confirmed specified defaults, waived defenses, released claims, or accepted other provisions that remain relevant after the forbearance period ends.

The effect of those provisions in a later bankruptcy case depends on the language, the rights involved, bankruptcy law, and the facts.

A waiver of state-law defenses does not automatically answer every issue that can arise under the Bankruptcy Code.

At the same time, a borrower should not assume that filing bankruptcy erases everything it agreed to in the forbearance agreement.

The interaction needs legal analysis.

That analysis is easier when it happens before the lender resumes enforcement.

Forbearance and Bankruptcy Should Be Evaluated Before the Deadline

The decision is not simply “forbearance or bankruptcy.”

A borrower needs to understand what each path is designed to accomplish.

Forbearance can provide negotiated time to execute a specific solution.

Chapter 11 can provide a court-supervised framework for a broader financial restructuring.

Subchapter V can provide a different Chapter 11 process for qualifying small business debtors.

In some situations, a successful forbearance avoids bankruptcy.

In others, evaluating bankruptcy gives the borrower a clearer understanding of its alternatives during workout negotiations.

And in some cases, the business’s overall financial condition can make restructuring more practical than repeatedly extending a temporary forbearance.

The important point is timing.

Don't wait until the forbearance period is about to expire to start evaluating alternatives.

Understand the business’s financial position, the lender’s rights, the proposed concessions, and the available restructuring options before signing.

That gives the borrower a better foundation for deciding whether additional time from the lender is enough or whether the business needs a broader solution.

Five Mistakes Commercial Borrowers Make When Facing a Forbearance Agreement

A commercial forbearance agreement can provide useful time after a default, but the terms you sign at the beginning can shape what happens if the workout doesn't succeed.

For business owners and commercial property owners dealing with a forbearance agreement under New York law, loan documents, enforcement, or litigation, avoid these five mistakes before signing.

• Signing the lender’s draft without counsel because it was presented as standard and non-negotiable. A lender’s proposed agreement is still a contract, and you need to understand its terms before signing. The draft can include waivers of defenses, releases, acknowledgments of debt, new covenants, reporting requirements, additional default triggers, and provisions governing what happens when the forbearance ends. Some terms may be negotiable, depending on the circumstances and the lender’s willingness to make changes. An attorney can compare the proposed agreement with the original loan documents, identify issues that deserve attention, and help the borrower understand what it is being asked to give up in exchange for additional time.
• Accepting the lender’s proposed forbearance period without evaluating whether the exit path can realistically be completed within that window. The forbearance period should have a practical connection to what the borrower is trying to accomplish. Refinancing can require underwriting, diligence, valuation, documentation, and closing. A commercial property sale can require marketing, negotiation, diligence, financing, and other closing steps. A loan modification can require financial submissions and several rounds of negotiation. If the proposed period does not allow enough time for the intended solution, identify that issue before signing. Additional time only helps if the borrower can use it to move toward a realistic resolution.
• Treating the “Specified Default” definition as something that does not need to be reviewed. The Specified Default definition can determine exactly what the borrower is acknowledging in the agreement. Compare that language with the original default notice and the loan documents. Confirm that the borrower understands every default included in the definition. If the proposed language includes additional alleged defaults or goes beyond the issue that started the forbearance discussion, address it before the agreement is executed. Do not treat a contractual acknowledgment as routine wording.
• Assuming the forbearance agreement leaves every future option unchanged. A borrower can still pursue restructuring, litigation, refinancing, a sale, or bankruptcy after entering a forbearance agreement, but the agreement can still affect the legal and financial landscape. A waiver of defenses, release of claims, acknowledgment of debt, confirmation of default, or new covenant can become relevant later. The effect depends on the language and the circumstances. If Chapter 11 or another restructuring option becomes necessary, the borrower should evaluate how that strategy interacts with the proposed forbearance agreement before signing.
• Waiting until the forbearance period expires to consult an attorney. By expiration, the lender can be preparing to resume enforcement under the loan documents and the forbearance agreement. The borrower can also be dealing with concessions it already made when the agreement was signed. Waiting until that point leaves less time to evaluate refinancing, a sale, modification, litigation issues, or restructuring alternatives. The more useful time for legal review is before signing the agreement. At the same time, the borrower can still evaluate the proposed terms and determine whether the forbearance period supports a workable exit strategy.

These mistakes have one thing in common.

They happen when the borrower focuses only on obtaining more time.

Time matters after a commercial default, but time by itself does not resolve the debt.

The borrower needs to know what it will do during the forbearance period, what rights it is giving up to obtain that time, what obligations it is accepting,

and what happens if the proposed exit does not work.

A forbearance agreement should therefore be evaluated as part of the business's broader financial and legal strategy.

Before signing, understand the default.

Understand the lender’s draft.

Understand the proposed timeline.

Understand the concessions.

And understand the alternatives if the workout does not produce a long-term resolution.

That gives the borrower a clearer basis for deciding whether the proposed agreement actually provides useful breathing room or postpones the next stage of the default.

How Do You Negotiate a Commercial Forbearance Agreement in New York?

A commercial borrower dealing with a forbearance agreement governed by New York law should approach it as a negotiation, not simply as paperwork required after a default. The goal is to understand the lender’s rights, preserve key borrower rights where possible, and ensure the additional time supports a realistic path forward.

When a lender sends a proposed forbearance agreement, the borrower can feel as though there are only two choices.

Sign the agreement or face immediate enforcement.

The actual situation can be more nuanced.

The lender has rights under the loan documents, but a consensual workout can also benefit both sides when a realistic path to resolving the default

exists.

For the borrower, that means the first draft should be evaluated against the loan documents, the alleged default, the business’s financial condition, and the plan for resolving the debt.

The question is not whether you can change every provision.

The question is which provisions matter most and whether the proposed agreement gives the borrower enough time and flexibility to execute a workable solution.

Step 1: Retain a Commercial Loan Workout Attorney Before Responding to the Lender

Evaluate a proposed forbearance agreement before you sign it.

Counsel can review the original loan documents, default notice, guarantees, security documents, and proposed forbearance agreement together.

That broader review matters because the proposed agreement may ask the borrower to make acknowledgments or waive rights under the original loan documents.

Before responding, identify the alleged default.

Determine what provision of the loan documents the lender is relying on.

Check whether the documents required notice.

Determine whether a cure period applied.

Review the amount the lender claims is outstanding.

Identify any default interest, fees, expenses, or other amounts being added.

Then compare those issues with what the borrower is being asked to acknowledge in the forbearance agreement.

J. Singer Law Group works with commercial borrowers and business owners nationwide on loan workouts, default disputes, and restructuring matters.

When litigation is involved, the firm represents businesses in matters filed in New York, including businesses headquartered outside the state.

The firm’s approach considers the immediate lender problem alongside the business's broader financial position.

That matters because the right negotiation strategy depends on what happens if the consensual workout fails.

Step 2: Audit the Lender’s Compliance With Notice and Cure Requirements

Do not assume that receiving a default notice automatically answers every question about the lender’s contractual rights.

Start with the loan documents.

Commercial loan agreements can contain specific provisions governing notice, cure periods, acceleration, defaults, and remedies.

The exact requirements depend on the documents and the type of default involved.

A payment default can be treated differently from a covenant default.

A maturity default can have different consequences from a failure to provide financial reporting.

Some defaults can have a contractual cure period.

Others can trigger different rights.

The borrower should determine what the agreement actually requires before acknowledging the default in a new contract.

Ask:

• What provision was allegedly breached?
• When did the alleged default occur?
• Was notice required?
• Was notice properly provided?
• Did a cure period apply?
• Has that period expired?
• Did the lender follow the contractual process for the remedy it is asserting?
• Are the amounts in the default notice consistent with the borrower’s records?

If an issue exists, identify it before the borrower signs a document that acknowledges the default or waives related defenses.

The purpose of this review is not to manufacture a dispute.

It is to understand the existing contractual position before changing it.

Step 3: Negotiate the Forbearance Period Length to Match a Credible Exit Timeline

The forbearance period should align with a plan.

If the borrower intends to refinance, determine what needs to happen before a new loan can close.

That can include preparing financial information, approaching lenders, obtaining a term sheet, completing underwriting, obtaining an appraisal, satisfying diligence requirements, negotiating loan documents, and closing.

If the exit strategy is a property or asset sale, consider the time needed to market the asset, negotiate the transaction, complete diligence, satisfy closing conditions, and close.

If the borrower is pursuing a loan modification, understand what financial information the existing lender requires and how far the parties have progressed in the negotiation.

Then compare that realistic timeline with the forbearance period in the lender’s draft.

A period that ends before the proposed solution can realistically be completed can leave the borrower facing renewed enforcement without having solved the underlying problem.

The borrower can use a documented exit plan to explain why they're requesting additional time.

The lender is not required to agree.

But the requested period should be based on what the borrower needs to accomplish, not an arbitrary deadline.

Step 4: Limit the Scope of the Specified Default Definition

The Specified Default provision deserves its own review.

The borrower should know exactly what it is acknowledging.

Compare the definition in the proposed forbearance agreement with the lender’s original default notice.

If the default notice identified a missed payment, determine whether the forbearance agreement is limited to that issue or includes additional alleged defaults.

If several defaults are listed, verify each one against the loan documents and the facts.

The borrower should also look for broad language that could be interpreted as acknowledging matters beyond the immediate dispute.

A carefully defined Specified Default gives both parties a clearer understanding of what the forbearance is intended to address.

Apply the same review to any acknowledgment of debt, waiver of defenses, release, or guarantor provision.

The borrower should understand what each provision covers before agreeing to it.

Negotiate the New Covenants With the Same Care

The forbearance period and Specified Default are not the only negotiable issues.

New reporting requirements and financial covenants can determine whether the borrower can remain in compliance throughout the forbearance period.

Review each obligation operationally.

If the agreement requires weekly financial reporting, can the company reliably produce it?

If the lender requires a minimum cash balance, is that level realistic based on current cash flow?

If the borrower needs lender approval before taking certain business actions, could that interfere with the proposed refinancing, sale, or restructuring?

If the agreement establishes milestones, do those dates correspond with the actual exit plan?

A borrower should not agree to conditions it already knows will be difficult or impossible to satisfy.

If a requirement needs clarification or adjustment, address it during the negotiation.

Understand What Terminates the Forbearance

A borrower also needs to know exactly what allows the lender to end the forbearance period early.

The agreement can identify new events that terminate the lender’s obligation to refrain from enforcement.

Read those provisions carefully.

Does one missed reporting deadline terminate the agreement?

Is there a cure period?

Does the lender need to provide notice?

What happens if a refinancing milestone is delayed for reasons outside the borrower’s control?

What happens if financial performance changes during the period?

Can the lender terminate based on a new default under another loan document?

The answers determine how durable the additional time really is.

A stated forbearance period has limited value if the agreement contains conditions the borrower is unlikely to satisfy.

Build the Negotiation Around the Exit Strategy

A productive forbearance negotiation should connect the legal terms to the business plan.

The borrower should be able to explain what it is trying to accomplish during the additional time.

If the plan is refinancing, the lender should understand where that process stands.

If the plan is a sale, the borrower should be able to explain the anticipated transaction process.

If the goal is a loan modification, the parties should identify what information or negotiations remain outstanding.

If the borrower is evaluating broader restructuring, they need enough time to understand those options before enforcement resumes.

This does not mean the lender has to accept the borrower’s preferred terms.

It means the borrower should negotiate from a concrete plan rather than simply asking for more time.

The Agreement Should Support the Plan, Not Work Against It

A forbearance agreement can be useful when it creates a realistic window for resolving a commercial default.

But that window needs to match the problem.

Before signing, the borrower should understand the original default, the lender’s remedies, the rights being waived, the new obligations being accepted,

the length of the forbearance period, and the events that can end it early.

Then compare those terms with the actual exit strategy.

The strongest agreement is not necessarily the one that provides the longest delay.

It is the one that gives the borrower a workable period to pursue a realistic solution without accepting terms the business cannot satisfy.

That is the purpose of the negotiation.

Not simply to postpone enforcement, but to create enough room to address the underlying debt while the borrower still has options.

Frequently Asked Questions

What is the difference between a forbearance agreement and a loan modification?

A forbearance agreement generally gives a borrower temporary relief from specified lender enforcement while the underlying loan remains in place. The borrower is still expected to address the default or pursue another resolution during the forbearance period.

A loan modification changes one or more terms of the existing loan over the long term. Depending on the agreement, that can include changes to the maturity date, payment schedule, interest terms, amortization, covenants, or other provisions.

The practical difference is important.

Forbearance usually creates time to work toward a solution.

A modification changes the loan itself.

Before signing a forbearance agreement, the borrower should understand whether the lender is actually considering a permanent modification or is simply agreeing to delay specified enforcement actions for a limited period.

What happens when a commercial forbearance period expires in New York?

The answer depends on the loan documents and the forbearance agreement.

If the borrower has not refinanced, modified the loan, sold the property or another asset, paid the debt, extended the forbearance, or pursued another resolution, the lender can resume the remedies it temporarily held back.

Depending on the documents and circumstances, those remedies can include acceleration, foreclosure, litigation, enforcement against collateral, or other contractual remedies.

The borrower should also determine whether additional notice is required before enforcement resumes or whether the agreement allows the lender to proceed once the forbearance period ends.

Understand those terms before signing.

The expiration date should not be treated as the date to begin deciding what comes next.

It should be the date by which the borrower expects its next step to be underway or completed.

Should I sign a commercial forbearance agreement without an attorney?

A commercial borrower should have counsel review a proposed forbearance agreement before signing when the agreement includes acknowledgments of debt or default, waivers, releases, new covenants, additional reporting requirements, guarantor provisions, or new default triggers.

The lender’s draft documents the lender’s agreement to forbear and the conditions attached to that decision.

The borrower needs to understand its side of that bargain.

An attorney can compare the proposed agreement with the original loan documents, default notice, guarantees, and other relevant documents and identify provisions that could affect the borrower’s position later.

That review is especially important before signing waivers, releases, or factual acknowledgments that can become relevant if the workout does not succeed.

Can bankruptcy stop a commercial foreclosure after a forbearance agreement expires?

A bankruptcy filing generally triggers the automatic stay under 11 U.S.C. § 362, which restricts many covered collection and enforcement actions against the debtor or property of the bankruptcy estate.

That can include certain foreclosure activity.

But the automatic stay is not absolute, and creditors can seek relief when a legal basis exists. Other statutory exceptions and limitations can also apply.

The effect of a bankruptcy filing therefore depends on the borrower, the property, the timing, the creditor’s rights, and the circumstances of the case.

A prior forbearance agreement can also matter.

If the borrower acknowledged the debt, confirmed specific defaults, released claims, or waived defenses, those provisions must be evaluated as part of the bankruptcy analysis.

Bankruptcy should not be treated simply as an emergency button to press when the forbearance period expires.

If restructuring could become necessary, it is better to evaluate that possibility while the borrower still has time to understand the available options.

Do COVID-19 forbearance protections apply to commercial mortgages in New York?

COVID-era mortgage protections should not be assumed to provide a general right to commercial mortgage forbearance.

Commercial borrowers need to evaluate their rights under the applicable loan documents, any negotiated agreements with the lender, and the law that applies to the particular transaction.

A business owner dealing with a commercial mortgage default should therefore avoid assuming that protections associated with residential mortgage relief automatically apply to a commercial loan.

The analysis should begin with the actual commercial loan documents and the current circumstances of the default.

What leverage does a commercial borrower have when negotiating a forbearance agreement?

No single source of negotiating leverage applies to every commercial default.

The borrower’s position depends on the loan documents, collateral, financial condition, default, available defenses, refinancing prospects, property value, cash flow, guarantees, and the realistic alternatives available to both sides.

A credible exit strategy can matter.

If the borrower has refinancing underway, an active sale process, a realistic modification proposal, or another concrete path to resolving the debt, that information can help frame the negotiation.

The lender can also consider the time, cost, and uncertainty of pursuing available enforcement remedies versus a consensual resolution.

That does not guarantee that the lender will accept the borrower’s requested terms.

It means the negotiation should be based on the actual financial and legal circumstances rather than a general assumption that either side controls every term.

The borrower should know what it can realistically accomplish, what it needs from the lender, and what alternatives remain if it cannot reach an agreement.

The Next Step

A commercial forbearance agreement can provide valuable time after a default.

But time is only useful if the agreement gives the business a realistic opportunity to solve the underlying problem.

Before signing, understand what the lender is agreeing not to do.

Understand what the borrower is acknowledging.

Understand which defenses or claims are being waived or released.

Understand the new covenants and reporting requirements.

Understand what ends the forbearance early.

And understand what needs to happen before the expiration date arrives.

The goal should not be to sign whatever agreement postpones enforcement for another few weeks or months.

The goal should be to determine whether the proposed agreement fits a credible plan for refinancing, modification, sale, restructuring, or another resolution.

That analysis matters most when the lender’s draft includes broad waiver language, debt acknowledgments, guarantor provisions, new defaults, or a timeline that doesn't match the borrower’s intended exit.

J. Singer Law Group works with commercial borrowers and business owners across the country on loan workouts, default disputes, and restructuring matters. When litigation is involved, the firm represents businesses in matters filed in New York, including businesses headquartered outside the state.

If your business has received a proposed forbearance agreement, the time to understand it is before you sign it.

Contact J. Singer Law Group or call (917) 905-8280 to discuss the proposed agreement, the underlying default, and the options available to your business.

About the Author

Jeb Singer, Esq. is the Managing Partner of J. Singer Law Group. He was admitted to practice in New York in 2009 and founded J. Singer Law Group in November 2014. Earlier in his career, he clerked for the Honorable Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York.

His practice includes commercial litigation, commercial loan workouts, bankruptcy, and restructuring. That experience informs the firm’s approach to commercial defaults: understand the documents, identify the immediate enforcement risk, evaluate the larger financial picture, and build a strategy around what the business can realistically do next.