Rough Justice

'We'll need another waiver, Mo,' LeFort said evenly. He always used the term 'we' when referring to his clients, to encourage their creditors to think of them as a team. A team they couldn't quit.

'I'm not so sure, John,' said Mo, who at this point was showing worrisome signs not only of quitting the team, but of selling the franchise.

'Another month on the principal payments would do it.'

'We've rolled over the one-month waiver six times. How long can we keep waiving? Steere owes both past and current principal payments on his outstanding loans.'

'It's a temporary situation,' LeFort soothed. His gaze wandered over his desk, which was stacked with squared-off correspondence and legal pads. A Waterford pen and pencil set and black-and-white photographs were the only personal touches; LeFort much preferred black-and-white portraits to color. 'We're meeting the interest payments. We'll resume principal payments as soon as the acquittal is in, any day now. The bank retains the properties as collateral. The debt is secured.'

'I'm at a loss to see how. I reviewed the leases, and those properties can't generate the cash to resume principal payments, with the interest and taxes. The purpose of the investment was the resale of the properties. Steere's legal position makes that untenable, perhaps impossible.'

'Our legal position is sound.'

'Sound, you say? His defense lawyers are dropping like flies. One vanished and one shot. It's been on every broadcast. My wife thinks they jumped ship, for God's sake!'

LeFort laughed, not so loudly as to be impolite. Bunny was a hysteric, everybody knew it. 'Remember that the jury is deliberating. They have the case. I sat in the courtroom, I saw the closing, and I can tell you that in my judgment they will acquit by the end of business tomorrow.'

'So you say, but Steere's refinancing brings the debt above conservative appraisals— above anybody's appraisal— of the liquidation value of the property. On paper, these nine buildings are valued at ninety-three million. They're probably not worth sixty million, and our exposure is growing.'

'We're almost out of the woods, Mo.'

'John, the committee is concerned. Deeply concerned. Every hour the jury takes to reach its decision decreases the salability of the properties. If the jury is hung, this could go on for another year. Then we can't wait for the best offer. We'll have to liquidate.'

'You won't have to liquidate.'

'I don't mind telling you, I'm out on a limb at this point. Personally, I mean.' Mo sighed, and there was the musical chink-clink of ice cubes against crystal. LeFort knew what that meant. Glenfiddich, the elixir of downside analysis.

'I wouldn't worry overmuch, Mo.'

'How can I not? I've lent you more than the properties are worth in a fire sale. No, more than they're worth, period. The committee will have my head for this one.' Another clink, then the sound of a discreet sip. 'John, if Steere has any hidden resources, hidden assets, he should bring them into play. Anything in Switzerland, the Isle of Man, the Caymans. God, man, now is the time. Concealing them is no longer—'

'There's no concealment,' LeFort assured him. There was nothing to hide. Steere's net worth was by any measure negative, he was so extraordinarily leveraged, but no one with whom Steere did business could admit as much. In other words, if Steere weren't so in debt, he'd be broke. LeFort no longer found it ironic that massive debt was as potent as massive wealth.

'I know we're not the only lender,' the banker said. 'Not the only note. We certainly don't want to be the last one to call.'

LeFort flinched when he heard the C word. Some thought cancer was the ugliest C- word, but banking lawyers knew better. 'Calling the notes is a lose-lose proposition; you know that, Mo. You don't want to send us all into bankruptcy court for the next three years. The bank would have to settle for an embarrassing fraction. Stay the course and you'll come out in clover.'

'John, my back is to the wall this time.' There was another clink, then ice rattling hollowly. The bottom of the tumbler. LeFort guessed Mo would pour another, and he did. So what John had been hearing around the club was true.

'Don't forget,' LeFort added, 'you have Steere's personal guarantee on the refinancing.'

A laugh, and a gulp. 'What's the personal guarantee of a convicted felon worth?'

LeFort stiffened. This conversation was growing tiresome, and he'd already had four others like it. It was time for hardball. 'Are you calling the notes, Mo?'

'I didn't say that.'

'Good. Then we'll need thirty more days.'

'I can't do that, John.'

'If you can't, then call the notes.'

'I can't do that either,' the banker said, frustration clear in his voice. 'If Steere's intention is to sell the properties to the city, I would urge him to entertain reduced offers now. We had two calls today from the mayor's office. They want those properties, John. They said fifty million was the starting point.'

'We're not ready to sell yet. We expect the price to rise as the election gets closer.'

'More money from the city, John? It's blood from a stone.'

'Not from the city. We understand a group may be getting together to buy the buildings. Leonard Corbin and his group.'

'We can't wait for that. The committee won't stand for it. One of those properties should be under an agreement of sale by the end of the week.'