At the point in time when the economic structure of loan becomes financially unsupportable for the borrower, a lender is faced with a few options. The lender could simply default the loan and begin collection activity. Alternatively, the lender could seek to re-work the deal in some way to provide some breathing room for the
Steps to Attach and Perfect – The Mystery of Proper Collateralization
When making a secured loan, the process of making sure your collateral is actually – legally – your collateral can be more difficult than expected or later determined. The steps are fairly simple, but the analysis and execution can be lacking for a number of technical reasons which can render your first priority lien a
A/R Lender. Counting Your Eggs Before They’re Laid.
In good times many lenders are willing to approve a loan which is secured only by accounts receivable. The ability to value A/R seems more straightforward than it actually is when considering underwriting. There are several legal and practical problems with collecting A/R which will reduce its ultimate value to a lender if the lender
Failure to Notice is Noticing to Fail
When things go south, it’s the little things that can get you into trouble. When the servicer on a commercial mortgage sent the notice of foreclosure to the address on the deed of trust, but not to the known updated address of the obligors the obligors counter-sued for breach and the case has been pending
Two Lawsuits Diverge and I take the Defendant Less Liable
To paraphrase Count Ciano, Success has many fathers and failure has many targets. You may recall a while back I wrote about how a loan to old General Motors (worth $1.5 billion) was accidentally rendered un-secured. When GM entered bankruptcy, the loan was ultimately determined to be unsecured and lenders (presumably) lost billions. As
Sometimes Your Collateral is Source Code, which is Actually Nothing
We are well out of the .com bubble, but tech companies still form and fail. For the lenders brave enough to lend to the tech companies developing software, the collateral is often the source code which is the nuts and bolts of an application or “app”. While the source code is actually a written text
The Only Thing Worse Than a Claim in Bankruptcy is Claim Subordination
Claim subordination is the opposite of alchemy. In most bankruptcy cases, creditors might look for ways to improve their treatment. Claim subordination in the bankruptcy code provides a mechanism to force a creditor to receive worse treatment (relative to other non-subordinated claims which is, admittedly, not that great of treatment).
In bankruptcy, there are a
PWC Escapes MF Global, Inc. Class Action Suit Claiming In Pari Delicto
I have been told that in a traffic jam ambulance drivers are taught to move to the first opening available in traffic and figure out where to go after that. Sometimes legal strategy takes that same philosophy. In a recent 2nd Circuit Case, PriceWaterhouseCoopers, LLP (“PwC”) asserted in pari delicto to avoid immediate liability
Make Whole Provisions: the Need to Aggressively Walk Back Aggressive Collection Provisions
Unexpected things happen in bankruptcy. Some debts can be restructured, some debts can be reduced and some debts the debtor is just stuck with. In contrast, outside of the bankruptcy ecosystem, economic interests are treated normally. Because of the difference, a creditor’s activities for recovery in bankruptcy will, at times, seem at odds with