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Description
When there are multiple guarantors of a loan, the law regarding the portion of the obligation that each guarantor is obligated to pay is often different from what the guarantors would have agreed upon if they had considered the issue at the time they closed the loan. A well-drafted contribution agreement is critical in establishing obligations among guarantors and their rights regarding contribution.
Most guarantees provide for joint and several liability, and the co-guarantors are generally obligated to contribute equally to payment of the debt regardless of their relative roles in the transaction. Counsel can tailor the contribution agreement to reflect each guarantor's contribution obligation based on its ownership percentage in the borrower, management role, partial guaranty provisions in the guaranty, and other factors.
The contribution agreement should address any recalculation of shares in the event of the death or insolvency of a guarantor. Where the liability is based on a violation of nonrecourse carveouts, it should apportion liability based on who among the guarantors committed bad acts or took other actions triggering liability. The parties should also have a clear understanding of their contribution obligations if, after the lender commences an action, they disagree on whether to assert defenses.
Listen as our authoritative panel discusses these and other issues associated with contribution agreements and the rights of contribution under loan guaranties.
Presented By

Mr. Hayhurst’s professional life has focused for over 30 years on all aspects of lender and borrower representation, including real estate and commercial loan documentation, real estate loan workouts and foreclosure, receivership and loan/guaranty enforcement litigation.

Mr. Kaufman has over 15 years of experience assisting clients with a range of financing matters. His practice involves all aspects of secured and unsecured bank, mezzanine, and other senior and subordinated lending. Mr. Kaufman represents borrowers, banks, funds and other lenders. He guides clients through the complexities of subordination and intercreditor arrangements, the negotiation of financial covenants and the perfection of collateral.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Live Online
On Demand
Date + Time
- event
Tuesday, July 7, 2020
- schedule
1:00 p.m. ET./10:00 a.m. PT
Outline
- Contribution obligations generally, absent a contribution agreement
- Factors to consider in apportioning contribution obligations
- Benefit obtained from the transaction
- Ownership percentage
- Management role
- Partial guarantees
- Carveout guaranties
- Tax considerations
- Waivers and defenses
Benefits
The panel will review these and other key issues:
- Absent a written agreement, what is the common assumption as to contribution obligations when there are multiple guarantors?
- What are the factors to consider in allocating liability under a contribution agreement?
- How should the death or insolvency of a guarantor impact contribution obligations?
- How should parties account for the bad acts of one guarantor?
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