Commercial Loan Guarantees Under Heightened Scrutiny
Strategies for Lenders and Guarantors in Drafting, Negotiating and Enforcing Guaranty Agreements
Recording of a 90-minute CLE teleconference with Q&A
Conducted on Tuesday, July 21, 2009
Recorded event now available
This seminar will analyze key components of commercial loan guaranties and defenses to the enforceability of these agreements. The panel will outline best practice for both lenders and guarantors in structuring, drafting and negotiating guaranty agreements in connection with loan workouts and new loan transactions.
Description
Parties may have given little attention to guaranties in commercial loan transactions in the past. However, as loan defaults continue to climb, lenders increasingly seek to enforce guaranties, particularly with commercial real estate and construction loans.
In a loan workout, guarantors may be deemed released from the obligations if a significant loan term is modified without the guarantor's consent. Lenders must carefully examine the waiver of suretyship defenses in the guaranty to ensure the continued obligation of the guarantor.
Corporate and personal guarantors should increase their vigilance in negotiating with lenders. As lenders weigh remedies and guarantors evaluate exposure, the parties must analyze the scope of the guaranty, the extent of exposure, and issues of enforceability.
Listen as our authoritative panel of commercial financing attorneys discusses the key elements of loan guaranties, potential defenses to enforceability, and best practices for both sides in structuring, drafting and negotiating commercial loan guaranties.
Outline
- Scope of guaranty agreements
- Guaranty of payment v. collection
- Full or limited payment/duration guaranty
- Reducing guaranty
- Carve out “bad boy” guaranty
- “Springing” guaranty
- Completion guaranty
- Intercorporate guaranty (“upstream, downstream, cross-stream”)
- Drafting guaranty agreements; key provisions
- Invalidity as to primary obligor
- Subrogation
- Waiver of suretyship and defenses
- Notice of default
- Notice and cure opportunity
- Right to revoke/continuing guaranty
- Environmental indemnity
- Guarantor covenants
- Liability for multiple obligations
- Enforcement Issues
- Interpretation of guaranty
- Consideration for guaranty — timing of guaranty
- Acceptance by lender
- Fraud
- Ambiguity
- Material increase in risk
- Lender breached first
- Impairment of collateral
- Right to jury trial
- Loan modification/workout considerations
- Foreclosure considerations
- Bankruptcy considerations
Benefits
The panel will review these and other key questions:
- In what situations will lack of consideration be a viable defense to enforceability?
- What is the distinction between a guaranty of payment and a guaranty of collection, and why does this matter?
- What lender liability risks are inherent in its dealings with a guarantor?
- How do springing guaranties in commercial mortgage loans affect the distressed borrower's options?
Faculty
Charles (C. J.) Schoenwetter,
Partner
Bowman and Brooke, Minneapolis
He concentrates his civil litigation practice in the areas of general commercial, construction and product liability litigation, with a special focus relating to UCC, products liability, tort, and breach of contract/warranty claims. C.J.'s experience also extends to the area of alternative dispute resolution, including arbitration.
Tony Toranto,
Special Counsel
Luce Forward, San Diego, Calif.
He specializes in real property transactions, business transactions, and clean technology. His expertise includes advising borrowers, lenders, and guarantors on loan documentation, workout and loan enforcement issues across loans totaling billions of dollars. He also advises clients on general business, corporate and transactional matters, from entity formation to complex contractual negotiations.
Ordering
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CLE:
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Customer Reviews
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Horton Maddox & Anderson
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Thrivent Financial
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Wright Lindsey & Jennings
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Bowman and Brooke
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Davis Wright Tremaine
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Nixon Peabody
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Epstein Becker Green
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