Structuring Forbearance Agreements and Strengthening Lender Collateral Position

Crafting Waiver of Existing Defaults, Borrower Reps and Warranties, Confirmation of Liens, Ratification of Obligations

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

Conducted on Wednesday, August 19, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will equip counsel to negotiate and draft forbearance agreements that provide maximum protection of lender interests while at the same time minimizing the risk of lender liability claims. A well structured and well drafted forbearance agreement can strengthen the lender's position should the debtor-borrower file bankruptcy or seek other insolvency relief. The program will also discuss how the workout process creates opportunities to correct deficiencies in existing loan terms, shore up weak documentation, or secure additional collateral or covenants.

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.

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Outline

  1. Correcting loan documentation deficiencies and strengthening collateral
    1. Updated UCC searches
    2. Special collateral perfection examination
    3. Tax and judgment lien search
    4. Additional collateral
    5. Guarantees
  2. Drafting the forbearance or waiver agreement
    1. Waiver of existing defaults
    2. Borrower representations and warranties
    3. Strict compliance with loan documents
    4. The expiration date and early termination
    5. Fees
    6. Ratification of obligations
    7. Confirmation of liens and security interests
    8. Release of claims

Benefits

The panel will review these and other high priority issues:

  • What is the difference between forbearance and waiver--and which option is best for the lender?
  • What are the critical provisions in the forbearance or waiver agreement?
  • What unique risks does the borrower's bankruptcy pose, and how can counsel minimize these risks in crafting the forbearance agreement?
  • What steps can the lender take during a loan workout to strengthen its position and minimize its risks in bankruptcy or foreclosure sale?

Faculty

Dickey, Allen
Allen J. Dickey
Partner
Faegre Drinker Biddle & Reath

Mr. Dickey is a real estate and finance attorney who advises real estate funds, opportunity funds, real estate...  |  Read More

Velocci, Frank
Frank F. Velocci
Partner
Faegre Drinker Biddle & Reath

Mr. Velocci resolves disputes for clients through litigation and arbitration in real estate, telecommunications, health...  |  Read More

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