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Five questions every credit committee should ask about its NPL book
Article
By: Prashan Patel
08 Jul 2026 2 min read
QUICK SUMMARY
Most non-performing loans are written off long before their value is exhausted. The recovery looks too slow, too costly and too uncertain, so the file is closed and the loss is booked. Yet in many cases the money hasn’t gone, it has simply moved.
Prashan Patel explores five questions that separate the books that recover value, from the books that don’t.
Contents
Once the security is gone, where does the value actually sit?
With unsecured exposures, the value rarely lies in the borrowing entity, it lies in the people behind it. Personal guarantors, promoters, ultimate beneficial owners and directors often hold the recoverable wealth, particularly where lending was supported by personal guarantees or where directors acted improperly. It’s essential to map the individuals connected to the loan, not just the corporate borrower. A claim against a person can be worth far more than a claim against an empty company.
Identifying the assets: do you really know where they are?
By the time a loan sours, assets have often been moved offshore, placed in trusts or holding structures, or registered in the names of family members or nominees. This doesn’t mean the assets are now beyond reach, they just need different tools. Targeted asset tracing and corporate intelligence can establish what an individual controls, even where they no longer appear to own it. It’s rare that assets disappear, instead they are often just disguised.
Are you treating insolvency as an outcome, or as a tool?
Insolvency is usually seen as the end of the road. However, when used deliberately and in the right circumstances, it’s one of the most powerful recovery routes available. Bankruptcies, liquidations and receiverships unlock investigatory powers that ordinary debt litigation can’t reach: compelling documents, examining directors under oath, and unwinding transactions designed to put assets beyond creditors. Applied across jurisdictions, these powers can open up structures that look watertight on paper.
Who should carry the cost and risk of recovery?
The instinct to write off is usually a response to cost, management time and uncertainty, not a judgement that nothing is recoverable. But a bank doesn’t have to shoulder that burden alone. Recovery can run on a risk-shared or fully contingent basis, be financed by third-party capital, or be taken off your balance sheet entirely by selling the loan or claim, often with an uplift if recoveries beat expectations. A cost centre can become a source of return.
How long can you afford to wait?
Time is the creditor’s enemy. Limitation periods expire, evidence goes cold and, crucially, every month gives a determined debtor more time to push assets further out of reach. Acting early, preserving evidence, securing freezing relief, moving before structures harden. Each of these can materially changes the odds. It’s also worth revisiting older, written-off books. Recovery is often still possible, even years after the loss was booked.
The largest recoveries on unsecured positions rarely come from the principal borrower. They come from guarantors, directors and the wider network around the debt — and reaching them takes real investment, in both time and cost, to build enough pressure to either settle or make a recovery. Borrowers are becoming far more sophisticated at structuring their assets out of reach, which is why this has become a specialism rather than a side task.
Prashan Patel
Partner, Grant Thornton
Authors
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Prashan Patel
I am a partner in Grant Thornton’s Insolvency and Asset Recovery practice and a licensed insolvency practitioner.View Profile