Pedro Henrique Torres Bianchi, an attorney specializing in debt recovery and credit markets, notes that many business owners prepare their renegotiation proposals by focusing solely on what their company can offer, without considering how the creditor on the other side of the table actually evaluates the proposal.
This blind spot often costs companies valuable time and better terms that could have been secured through a more informed approach to understanding the decision-making logic of the other party.
The Logic Behind a Creditor’s Decision
Understanding this logic can significantly improve the quality of a negotiation. A creditor—whether a bank, investment fund, or major supplier—rarely makes a decision based solely on goodwill or an existing relationship. Instead, the creditor compares, even if informally, the expected value of accepting the proposal with the expected value of other available alternatives, such as pursuing legal action, enforcing collateral, or simply waiting longer for payment. Even when this comparison is not explicitly discussed during negotiations, it guides much of the response a company ultimately receives.
Probability of Repayment Matters More Than Face Value
The first factor that weighs heavily in this calculation is the probability of repayment under each scenario considered by the creditor. A renegotiation proposal that may seem modest but is backed by tangible collateral and a recent track record of meeting other financial obligations tends to be more attractive than a higher-value proposal with no concrete evidence of its feasibility. Unsupported figures often generate more distrust than providing no figures at all.
Pedro Bianchi emphasizes that the time until repayment also factors into this equation, not just the face value of the debt. Receiving a smaller amount within six months may be worth more financially than receiving a larger amount over three years, especially when the creditor must also consider its own cost of capital and the uncertainty inherent in longer repayment periods. Few business owners present their proposals from this present-value perspective, missing an argument that could often work in the company’s own favor.
The Real Cost of the Creditor’s Alternatives
The cost of alternative courses of action also influences the decision. Legal collection proceedings cost both money and time, and even a favorable court ruling does not always result in actual repayment if the company lacks sufficient assets to satisfy the judgment. An experienced creditor calculates these costs before rejecting a reasonable proposal simply because it falls short of the total amount owed.
In this context, Pedro Henrique Torres Bianchi points out that this calculation includes legal fees, the time spent by the creditor’s internal legal team, and, in many cases, the risk that the debtor company may cease operations before the collection process produces any practical result. If that happens, the amount that could actually be recovered through legal proceedings could fall to zero.
Institutional Reputation Also Factors Into the Decision
Reputation also matters, particularly for institutional creditors. An investment fund or bank that repeatedly accepts poorly structured renegotiations without clear criteria may signal weaknesses in its own risk management practices to investors and regulators.
For this reason, well-supported proposals backed by verifiable data tend to move more quickly through these creditors’ internal governance processes than generic appeals for flexibility. This helps explain why two seemingly similar requests can receive completely different responses depending on how each proposal was presented and supported before the internal decision-making bodies of the creditor.
Successful Negotiation Means Understanding the Other Side’s Calculations
Ultimately, Pedro Bianchi recommends that any renegotiation proposal explicitly include a comparison with the creditor’s alternatives: why accepting this specific proposal is objectively better than pursuing another method of recovering the debt.
Companies that build their proposals around this logic, rather than focusing solely on their own need for financial breathing room, tend to receive faster responses and more favorable terms than those that simply ask for understanding without providing this comparative analysis. In the end, successful negotiation is less about convincing a creditor to be generous and more about clearly demonstrating why the proposal already represents the best available alternative for them.
