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Bankruptcy Litigation

Parent of Secured Creditor Does Not Automatically Gain Secured Status

The ruling in In re Jarvis that the grant of a security interest to a corporate lender will not necessarily “spread” that security interest to the lender’s affiliates underscores the need for precision and care in the drafting of loan documents, particularly with respect to the granting language contained in security agreements.

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In In re Jarvis, Case No. 19-10085; the U.S. Bankruptcy Court for the Western District of North Carolina determined that the grant of a security interest to a corporate lender will not necessarily “spread” that security interest to the lender’s affiliates. This decision underscores the need for precision and care in the drafting of loan documents, particularly with respect to the granting language contained in security agreements.

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