Structuring Forbearance Agreements and Strengthening Lender Collateral Position

Description

Well structured forbearance agreements or waivers are essential to protecting a lender's position. Counsel representing lenders must anticipate and successfully navigate obstacles during the negotiation process and avoid pitfalls that might give rise to lender liability challenges by borrowers.

A loan workout provides a lender the chance to strengthen its position and minimize risk due to the borrower's bankruptcy or a foreclosure sale. Waiver and forbearance agreements allow the lender to correct deficiencies in existing terms, documentation, or collateral.

Should the borrower file bankruptcy, the forbearance agreement will be reviewed by third parties, such as a court, a trustee, a creditors' committee, or others who may wish to challenge it. Thus, in any workout situation, counsel must structure and document the forbearance or waiver with bankruptcy considerations in mind. Waivers of the automatic stay and stipulations supporting relief in a bankruptcy filing are critical.

Listen as our authoritative panel of attorneys discusses best practices for crafting forbearance and waiver agreements that minimize lender risks and liabilities. The panel will also address steps lenders can take during the workout process to correct deficiencies in existing terms, documentation, or collateral.