Active Workout
Definition
Active workout is the period after a borrower stops performing as scheduled but before final resolution. The lender, servicer, or note platform may negotiate amendments, collect collateral, extend maturity, enforce rights, or restructure payment terms.
Why it matters
Workout is not the same as charge-off, but it is real distress. Some workouts recover to par, some reperform after amendment, and some eventually become losses. Investors should count active workouts as unresolved risk when evaluating a platform track record.
Common misconceptions
- •Workout does not automatically mean total loss.
- •A low charge-off rate can coexist with a meaningful workout population.
- •A borrower with prior workouts may still offer new deals, so borrower-level history matters.
Technical details
Typical workout paths
Extension: maturity is pushed out and coupon may change.
Amendment: covenants, reserves, amortization, or collateral terms are reset.
Enforcement: collateral collections, guarantees, or legal remedies become the focus.
Resolution: the deal repays, re-performs, or is charged off.