Bankruptcy Risks for Secured Lenders

Minimizing Claims Involving Fraudulent Transfer, Preference Challenges, Equitable Subordination and Recharacterization

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

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Conducted on Tuesday, February 26, 2013

Recorded event now available

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Course Materials

This CLE course will discuss key risks that secured lenders face with distressed or bankrupt borrowers, including fraudulent transfer, preference challenges, equitable subordination and recharacterization. The program will provide best practices for lenders to structure lending practices to minimize exposure and protect claims.

Description

Secured lenders face enormous risks when their borrowers are insolvent or file for bankruptcy. The most recent ruling in the ongoing TOUSA litigation dealt a blow to lenders' ability to get repaid by distressed borrowers with a key adverse ruling on a fraudulent transfer challenge.

As many of the leveraged buyout transactions in recent years head into bankruptcy, creditors have been aggressively attacking these deals, bringing fraudulent transfer claims against lenders.

Lenders also face preference challenges with respect to loan workouts made to distressed borrowers. Equitable subordination and recharacterization may be asserted against secured lenders by junior or unsecured creditors to obtain recovery from highly leveraged debtors.

Listen as our authoritative panel discusses the looming threats of fraudulent transfer, preference challenges, equitable subordination and recharacterization that secured lenders encounter when borrowers enter the zone of insolvency or file for bankruptcy. The panel will also discuss how lenders can minimize this exposure.

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Outline

  1. Fraudulent transfer
  2. Preference challenges
  3. Equitable subordination and recharacterization
  4. Trending lender liability issues
  5. Recent case law and litigation considerations
  6. Minimizing attacks on the claim

Benefits

The panel will review these and other key questions:

  • What challenges and pitfalls remain for lenders to distressed companies in light of the most recent TOUSA ruling?
  • How have the courts defined "inequitable conduct" to justify equitable subordination?
  • What are best practices for preventing secured lenders from becoming the target of a preference action?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Cohen, Theodore
Theodore A. Cohen
Special Counsel
Sheppard Mullin

Mr. Cohen specializes in creditors' rights and focuses on lender, indenture trustee, and lessor representation...  |  Read More

Zachary G. Newman
Zachary G. Newman
Partner
Hahn & Hessen

Mr. Newman represents companies, banking associations, leasing companies, commercial lenders, and hedge funds in...  |  Read More

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