Interested in training for your team? Click here to learn more

Non-Recourse Carve Outs, Bad-Boy Guaranties, and Personal Liability: Latest Developments

Avoiding or Resolving Lender and Guarantor Disputes in and Outside of Bankruptcy

Recording of a 90-minute premium CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, December 1, 2016

Recorded event now available

or call 1-800-926-7926

This CLE course will offer real estate and finance counsel an examination of some of the more troublesome provisions at the heart of disputes between borrowers and lenders. The panel will review commonly used carve outs contained in non-recourse provisions, analyze operative provisions in bad boy guaranties, and discuss recent court cases, including Cherryland and its progeny. The panel will outline strategies for avoiding and resolving disputes involving these provisions.

Description

To address deflation of commercial real estate values and collect deficiency judgements obtained after a borrower defaults, commercial real estate lenders pursue high net-worth guarantors for repayment of their non-recourse loans.

Counsel to borrowers and lenders must anticipate the serious pitfalls in using carve outs in so-called non-recourse loans and must understand the operative provisions of the “springing recourse” and bad-boy guaranties.

Fallout from the Cherryland ruling for real estate finance continues. Uncertainty regarding non-recourse carve-out guaranties remains an issue. Counsel must also grasp recent case law to prepare to examine guaranty enforceability, the scope of liability, and the maximum amount recoverable from the guarantor.

Listen as our authoritative panel of real estate and bankruptcy attorneys explains recent legal developments in the use and enforcement of commercial real estate loan guaranties, carve outs in non-recourse provisions, and Cherryland and other recent case law. The panel will also discuss strategies for resolving disputes involving these provisions.

READ MORE

Outline

  1. “Springing recourse” and bad boy guaranties: Wells Fargo Bank N.A. v. Cherryland Mall Ltd. Partnership
    1. Basic facts and procedural history
    2. Analysis
    3. Single-purpose entity/separateness: requirements and violations
    4. Definition of “single-purpose entity”
    5. Substantive consolidation in bankruptcy
    6. Cases relied upon - Borman
    7. Michigan and Ohio legislation
  2. Non-recourse carve outs
    1. Carve outs from A to Z
    2. Environmental indemnities
    3. Recent case law concerning non-recourse loans
    4. Other protective devices
    5. Tax implications and non-recourse debt
    6. Conclusion
    7. Sample provisions
  3. Case study
  4. Bankruptcy perspective
    1. Best case: Conclude a successful plan of reorganization whereby the remaining first mortgage debt is amortized over an extended period, but at a lower market interest rate
    2. Worst case: Provide for an orderly liquidation in bankruptcy, thus avoiding a distress sale at foreclosure
    3. Immediate benefits
    4. Impediments to reorganization
    5. Possible actions
    6. Future benefits
    7. Bring the mortgagee to the table
  5. Conclusion: What have we learned?

Benefits

The panel will review these and other key questions:

  • What are the types of non-recourse carve outs and how should counsel approach them?
  • What are the legal and practical ramifications for the guarantor of a defaulted loan under a carve-out guaranty?
  • What are the key strategies for resolving disputes involving these provisions?
  • How have these provisions been treated in bankruptcy and what are some strategies for resolving disputes in bankruptcy?

Faculty

Thomas W. Coffey
Thomas W. Coffey

Senior Counsel
Tucker Ellis

Mr. Coffey focuses his practice on bankruptcy reorganizations and insolvency matters and represents debtors, creditors,...  |  Read More

Schwarz, James
James H. Schwarz

Partner
Benesch Friedlander Coplan & Arnoff

Mr. Schwarz is a member of the firm's Real Estate & Environmental Practice Group. He has acted as...  |  Read More

Wright, Daniel K.
Daniel K. Wright, II

Partner
Brouse McDowell

Mr. Wright is a nationally recognized transactional lawyer who has represented major clients across the country. He is...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

google-site-verification=NgvHkbe8rQ01BghstsqPJ6of7p2sUpx-UGP5KrHmXEc