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Forbearance Agreements: A Useful Tool for Lenders After Default
With a borrower in default and facing the threat of imminent litigation or bankruptcy, both lenders and borrower are increasingly looking to the appealing alternative of forbearance agreements. These are arrangements whereby lenders refrain from exercising their available default remedies in exchange for certain concessions from the borrower. Depending on the circumstances, forbearance agreements give lenders an alternative to the expenses and delays associated with litigation or bankruptcy. Forbearance agreements can also be used to take the place of a more long-term modification of the parties' arrangement. Accordingly, a forbearance usually gives up little on the part of the lender, but allows the lender to secure a number of benefits that will be very helpful in the event of a subsequent default by the borrower.
Parties consider forbearance agreements for a variety of reasons. Lenders seldom immediately shut down a transaction after an initial default and typically give the borrower time to solve its financial problems. If the default is minor or is only temporary, a forbearance agreement may be entered into to give the borrower time to cure the default. In situations where the borrower and the lender are negotiating a broader restructuring, the parties may agree to enter into a forbearance agreement to give the lender time to analyze the default situation and determine if it is willing to consider a longer arrangement, as well as give the parties time to negotiate the terms of a possible restructuring and ultimately document the new arrangement. A lender may also consider a forbearance in situations where the borrower may be refinancing its debt or selling the company or its assets. Under these circumstances, a lender may agree to a forbearance simply to allow the 90-day preference period to expire with respect to any new collateral. Finally, lenders can use a forbearance agreement to correct certain deficiencies in the loan documents or with lender's interest in the collateral.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.