Nonrecourse Carve-Outs, Bad-Boy Guaranties, and Personal Liability

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

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

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Conducted on Tuesday, January 17, 2023

Recorded event now available

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Course Materials

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 in nonrecourse clauses, analyze operative provisions in bad-boy guarantees, and discuss significant court cases, including Cherryland and its progeny. The panel will outline strategies for avoiding and resolving disputes involving these provisions.


Despite many commercial loans characterized as "nonrecourse," most lenders require that a guarantor with sufficient net worth stand behind certain of the borrower's obligations under the loan. Such guarantors often believe that they are guaranteeing only against affirmative bad acts by the borrower, but lender recourse obligations often go beyond just "bad boy" carve-outs.

Counsel to borrowers and lenders must anticipate the harsh pitfalls in using carve-outs in so-called nonrecourse loans and must understand the operative provisions of the "springing recourse" and bad-boy guarantees.

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 nonrecourse provisions, and Cherryland and other current case law. The panel will also discuss strategies for resolving disputes involving these provisions.



  1. "Springing recourse" and bad-boy guaranties
    1. Single-purpose entity/separateness: requirements and violations; Cherryland
    2. Substantive consolidation in bankruptcy
    3. Other
  2. Nonrecourse carve-outs
    1. Carve-outs from A to Z
    2. Environmental indemnities
    3. Recent case law concerning nonrecourse loans
    4. Sample provisions
  3. Bankruptcy perspective


The panel will review these and other relevant issues:

  • What are the types of nonrecourse carve-outs? 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 principal strategies for resolving disputes involving these provisions?
  • How have these provisions been treated in bankruptcy? What are some strategies for resolving disputes in bankruptcy?


Lee, Kyung
Kyung S. Lee

Shannon & Lee

Mr. Lee practices in the area of debt restructuring and corporate reorganizations. He has served as debtor's...  |  Read More

Lubinski, Joseph
Joey E. Lubinski

MDH Law Group

Mr. Lubinski is a member of the firm’s Real Estate, Development and Construction team. His varied transactional...  |  Read More

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