I can guarantee you the bank don't give a chit what happens to her so long as they get theirs. Meaning if the machinery is held as collateral, they'll sell it all for 10 cents on the dollar if she turns it over to them and they'll still come after her for the balance. If she turns it over to them, they certainly won't be taking the time and effort to sell anything for the best price they can find or a fair market value. Your better off to notify the bank that your selling said collateral, then put the money on the loan when you get it sold. Otherwise she's just giving away any equity he's worked for.
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