Negotiating Commercial Loan Guaranties

Non-Recourse Terms and Conditions, Net Worth and Liquidity Covenants, Guaranties of Interest Rate Swap Obligations and More

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


Conducted on Thursday, March 20, 2014

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will provide counsel in real estate finance with a review of recent enforcement trends regarding non-recourse guaranties and discuss the rise in lender requirements for financial covenants in non-recourse guaranties. The panel will also outline the types of covenants being required and offer strategies for both guarantors and lenders in negotiating financial covenants.

Description

After the recent proliferation of litigation regarding the enforceability of non-recourse guaranties, lenders more closely scrutinize the net worth of guarantors. Unlike prior years, many lenders now require that the guarantor have assets independent of the mortgaged property.

Lenders are also requiring ongoing net worth and liquidity covenants. Negotiating points for both parties include the scope of assets and liabilities that are counted for the tests. Regarding liquidity, negotiation points include the definition of liquid assets and whether those assets can be encumbered.

Notice and cure rights will be a negotiating point for guarantors, and lenders will insist on regular reporting. Counsel representing either party must pay close attention to the drafting of these covenants to protect their client.

Listen as our authoritative panel of real estate finance practitioners provides an overview of enforcement of non-recourse guaranties, trends in lender requirement of net worth and liquidity covenants, and negotiation strategies for both guarantors and lenders in crafting these financial covenants.

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Outline

  1. Overview of non-recourse guaranties
  2. Net worth and liquidity covenants
  3. Guaranties of interest rate swap obligations
  4. Current issues and common pitfalls

Benefits

The panel will review these and other key questions:

  • How will the lender and guarantor each try to characterize assets and liabilities for purposes of the net worth test?
  • What assets will the lender want to exclude and what liabilities will it want to include?
  • What are typical liquid assets that lenders will consider for the liquidity covenant and what are negotiating points for guarantors with limited liquidity?

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

Faculty

William C. Holland
William C. Holland

Partner
Bryan Cave

Mr. Holland's practice focuses on corporate transactions with an emphasis on secured and unsecured commercial loan...  |  Read More

Gerard C. Keegan, Jr.
Gerard C. Keegan, Jr.

Partner
Alston & Bird

Mr. Keegan represents institutional lenders in all aspects of real estate financings and restructurings and investors...  |  Read More

Daniel Wheeler
Daniel Wheeler

Partner
Bryan Cave

Mr. Wheeler is a member of the firm’s Financial Services Client Service Group. For 15 years, he has advised...  |  Read More

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