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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Tuesday, January 16, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.


  • Live Online


    On Demand

$347.00

This course is $0 with these passes:

CLE
ALL

This CLE course will offer corporate finance, bankruptcy and real estate counsel an opportunity to hear about the key aspects of negotiations that lead to the creation of a bad-boy guaranty, and some of the pitfalls each side can run into in these negotiations. The panel will first review commonly used carve-outs in nonrecourse clauses, analyze operative provisions in bad-boy guarantees, and discuss significant court cases. The panel will then discuss the case law that has developed as a result of litigation over the enforceability of the bad-boy guarantees, the defenses that courts have accepted and rejected, and lastly the impact of the bankruptcy of either the direct obligor or the guarantor on the enforceability of the bad-boy guaranty.

Faculty

Paul Fisher
Of Counsel
Aronberg Goldgehn Davis & Garmisa

Mr. Fisher concentrates his practice in hospitality law, health care law and commercial real estate. He is general counsel to an international hotel company. Mr. Fisher represents clients in the acquisition, sale, leasing and financing of hotels, medical facilities, office buildings, and retail properties. He works extensively on the restructuring of commercial debt and commercial ventures, purchase of commercial debt, private equity transactions, bank regulatory matters and multiemployer pension fund liability. Mr. Fisher has also served as an expert witness in a variety of matters related to commercial lending and HUD regulation.

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Kyung S. Lee
Partner
Shannon & Lee, LLP

Mr. Lee practices in the area of debt restructuring and corporate reorganizations. He has served as debtor's counsel for companies in the airline, real estate, oil and gas, communications, healthcare, distribution, manufacturing and convenience store industries. He has also represented lenders, creditors, creditors' committees and investors involved in workouts and Chapter 11 reorganizations as well as litigating on behalf of the various parties. He has extensive experience working closely with senior management and financial advisors on valuation of enterprises and assets and development of turnaround and restructuring business plans.

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Description

Despite many commercial loans being characterized as "nonrecourse," most lenders require that a guarantor with sufficient net worth stand behind certain of the borrower's obligations and representations 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 legal developments in the use and enforcement of commercial real estate loan guaranties, carve-outs in nonrecourse provisions, and current case law relating to these issues. The panel will also discuss strategies deployed by parties in such litigation and their success on either the enforceability or invalidity of bad-boy guarantees in both state and federal courts, including bankruptcy courts.

Outline

  1. Negotiating over the "springing recourse" and bad-boy guarantees
    1. Single-purpose entity/separateness: requirements and violations
    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. Litigation over bad-boy guaranties
    1. Enforceability of bad-boy guaranties
    2. Legislation by states affecting bad-boy guarantees
    3. Available defenses to enforceability
    4. Bankruptcy implications on enforceability of bad-boy guarantees

Benefits

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?