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Press Release 08/15/2007






Settling Debts Can Help Cash-Strapped Builders, Contractors
By Steve Newman, Guest Columnist  

HIGHLAND PARK , Ill. (August 15, 2007)--As weakness in the housing market continues to pressure homebuilders, contractors, and suppliers, a business-debt expert is trying to inform these companies about a little-known alternative to bankruptcy and other drastic financial measures: business-debt settlement.  

Steve Newman, Principal of Performance Source Inc (PSI) in suburban Chicago , says, �The housing industry, especially homebuilders and their subcontractors, are now a year or more into a nationwide slowdown.  While many in the industry are feeling the impact, most of them are not aware of the opportunity to improve their cash flow and strengthen their balance sheets by settling their past-due debts�that is, by negotiating with creditors to lower the amounts that they owe.�  

Also known as payables management, it�s the professional specialty of firms such as PSI, which Newman describes as �an advocate for small-to-midsize companies, including homebuilders and their subs, which want to pay their debts but are unable.  We negotiate with these companies� creditors to lower their unpaid balances.�   

Done right, commercial-debt settlement can be a risk-free solution for the client (company in debt), Newman asserts.  The client first decides which payables will be negotiated, then approves (or declines) each debt settlement proposed by the negotiator, based on discussions with each creditor.  The client owes the negotiator nothing if a settlement is not reached with, or is not accepted by, the creditor.  If is accepted, the negotiator�s fee is a flat percentage of the of the debt savings achieved.  

Newman explains that this method has enabled PSI to help thousands of clients since 1963 to steady their finances, in part because PSI also handles all contact with their creditors.  

As 2007 has progressed, more and more housing-related companies have inquired about PSI�s services.  Given recent headlines, it�s easy to see why:  

  • May 2007 was the fourth month out of the past five in which new-home sales declined from month to month, according to U.S. Commerce Department.

  • In the second quarter of 2007 the nation�s second-largest homebuilder, Lennar, posted a loss of $244-million after reporting a profit of $325-million for the same quarter a year earlier.  Lennar also has said it expects a loss in the third quarter of 2007.  In June the company�s CEO, Stuart Miller, described the market for the rest of 2007 as �weak, perhaps deteriorating.�

  • The National Association of Realtors predicts that new-home sales are likely to fall 18% this year�twice as much as the 9% drop it forecast in February.

Smaller builders are especially at risk for debt problems, Newman notes.  Being more thinly capitalized, they can be hurt faster by a prolonged construction delay, a materials-cost increase, and/or other factors, even on just one of their projects.   And indeed, dozens of small and midsize builders already have filed for bankruptcy since the end of 2006.  

While some builders in debt can expect flexibility from their banks, they should also be aware that it often comes at a cost.  In its May 21 article �Home Builders In A Hole,� BusinessWeek magazine notes in such debt restructurings, banks may impose �higher interest rates, special loan modifications, and tough stipulations that restrict everything from the builder�s right to repurchase shares to its ability to take on new debt.�  

Newman notes that in some cases, business-debt settlement such as that offered by PSI can minimize these problems with bankers.  �Settling non-bank debts not only can help a company improve its balance sheet; it can also put the company in a stronger position in the event that it needs to ask its bank for more flexible terms.�

Steve Newman is Principal of Performance Source Inc (PSI).  Since 1963, PSI has helped thousands of clients save millions of dollars and satisfy their creditors without borrowing money.  Under the company�s risk-free process, clients decide which payables they want PSI to negotiate, they approve (or decline) all proposed settlements in advance, and owe PSI nothing if a settlement is not reached or not accepted.  And because PSI also handles all contact with clients� creditors, clients are able to focus on growing their businesses.  Steve can be reached at 800/883-5080, or  The company�s web site is