Header graphic for print
Florida Banking Law Blog Legal developments impacting banking, finance and loan enforcement in Florida

Category Archives: Commercial Lending

Subscribe to Commercial Lending RSS Feed

Operation Choke Point

Posted in Banking Operations, Commercial Lending, FDIC Related Issues

As part of a coordinated, multi-agency initiative known as “Operation Choke Point,” the Federal Deposit Insurance Corporation (FDIC) has warned financial institutions that they might be liable for maintaining banking relationships with certain “high risk” businesses and customers.  Specifically, the FDIC expressed concern about relationships between banks and payment processors who use their deposit accounts… Continue Reading

Spouse-Guarantor Rule: A Split Between Federal Circuit Courts

Posted in Commercial Lending, Commercial Real Estate Lending

When a closely-held entity applies for a loan, the financial institution usually requires the entity’s owner(s) to guaranty the loan.  If the owner is married, the financial institution may also require the owner(s) spouse(s) to guaranty to improve the likelihood that loan will be repaid if the borrower defaults.  This seems like a logical credit… Continue Reading

Eleventh Circuit Concludes That Filing a Proof of Claim After the Expiration of Statute of Limitations On the Ability to Collect a Debt Violates the FDCPA

Posted in Bankruptcy, Commercial Lending

Recently, the Eleventh Circuit Court of Appeals (the “Court”) ruled whether filing a proof of claim in a chapter 13 bankruptcy case after the statute of limitations on the ability to collect the debt expires violates the FDCPA.  In Crawford v. LVNV Funding, LLC, et. al., Debtor was indebted to a furniture company.  A third-party… Continue Reading

Limits to the Duty to Preserve

Posted in Banking Operations, Commercial Lending, Debt and Judgment Collection

Although a suit against a particular officer of a corporation for sexual harassment would clearly trigger a litigation hold, what must counsel do about less obvious players in a more abstract dispute?  The recent case of AMC Technologies, LLC v. Cisco Systems, Inc., presents just such an issue. In AMC opinion, decided in the Northern… Continue Reading

Diligence in Hotel Lending

Posted in Commercial Lending

The hotel industry appears to be on an uptick, which is good news for lenders.  Hotel construction in May 2014 is up over 13% from the same time period in 2013.  Moreover, record high occupancy rates and low supply could continue to drive an influx of new rooms into 2015 and beyond.  As more lenders are… Continue Reading

Eleventh Circuit Rules Post-Confirmation Settlement Proceeds are Property of Chapter 13 Estate

Posted in Bankruptcy, Commercial Lending

A recent case out of the Eleventh Circuit Court of Appeals (the “Court”) concluded that proceeds stemming from a post-confirmation settlement agreement between a chapter 13 debtor and its mortgagor related to a violation of the automatic stay become property of the bankruptcy estate.  In Crouser v. BAC Home Loans Servicing, LP (In re Crouser),… Continue Reading

Guarantors Remain Liable Under Renewed Promissory Note, Even Absent Notice or Consent, Where the Modifications Are Not Adverse To the Guarantors’ Interests

Posted in Commercial Lending, Commercial Real Estate Lending

In a prior post, we discussed a grantor’s continuing liability under a promissory note that is renewed without his notice or consent where the guaranty is a continuing guaranty, meaning it contemplates revisions or extensions of time.  In this post, we discuss the additional argument that a guarantor remains liable for a renewed promissory note,… Continue Reading

“Substantial Compliance” With Notice Requirements Not Enough

Posted in Banking Operations, Commercial Lending, Residential Foreclosure

Florida’s Fifth District Court of Appeal recently emphasized the need for lenders to strictly comply with the notice requirements of a mortgage prior to foreclosure. In Samaroo v. Wells Fargo, the borrower appealed the circuit court’s entry of a summary final judgment of mortgage foreclosure. Finding that the bank failed to strictly comply with all… Continue Reading

Eleventh Circuit Holds Replacement Value – Applies to Surrender of Collateral in Chapter 13 Plan

Posted in Bankruptcy, Commercial Lending

On March 27, 2014, the Eleventh Circuit (the “Court”) issued a ruling, which will have a major impact on how Chapter 7 and 13 debtors are able to treat claims of secured creditors. The issue in In re Brown, 13-13013, 2014 WL 1245266 (11th Cir. 2014) was whether §506(a)(2)’s valuation standard, which requires use of… Continue Reading

An Exception to the Fair Market Value Rule: Use the Foreclosure Sales Price for a Deficiency after a Third Party Purchaser

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

If the value of a foreclosed property is less than the loan amount, lenders may seek a deficiency judgment from borrowers and guarantors after the foreclosure sale. In most cases, the lender is the sole bidder at the sale and takes title to the collateral property, so the court must determine the fair market value… Continue Reading

Guarantors Are Liable For Renewal Promissory Notes Executed Without Notice or Consent Even After Revoking Guaranty

Posted in Commercial Lending, Commercial Real Estate Lending, Residential Foreclosure, Residential Real Estate Lending

Promissory notes are often renewed and extended without the express written consent of, or even notice to, the guarantors of the note.  A guarantor, faced with changing circumstances and wishing to cut off his liability under a promissory note that has been renewed and extended beyond its initial maturity date, may decide to revoke or… Continue Reading

Recent Decision Caps Secured Creditor’s Credit Bid in §363 Sale to Purchase Price of Acquired Debt

Posted in Bankruptcy, Commercial Lending

It is well-settled that secured creditors are ordinarily entitled to credit bid their allowed secured claim in a sale pursuant to § 363 of the Bankruptcy Code (the “Code”). In Radlax Gateway Hotel, LLC v. Amalgamated Bank, 132 S.Ct. 205 (2012), the Supreme Court acknowledged that bankruptcy courts have the power to prohibit a secured… Continue Reading

Dirt-for-Debt Buries Creditor with Risk and Uncertainty

Posted in Bankruptcy, Commercial Lending

In order to confirm a chapter 11 plan of reorganization, a debtor must satisfy all the provisions of §1129(a) of the Bankruptcy Code, except for §1129(a)(8). Section (a)(8) requires that each class of creditors either (i) accepts the proposed plan or (ii) is unimpaired under the proposed plan. When a debtor fails to meet 1129(a)(8),… Continue Reading

Obtaining a Deficiency Judgment in Georgia – Overview of Procedures

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Residential Foreclosure, Residential Real Estate Lending

A previous post discussed the non-judicial foreclosure procedure used in Georgia. This post discusses the steps that a Florida bank doing business in Georgia, or with clients owning property in Georgia, must take to obtain a deficiency judgment against the debtor. A power-of-sale foreclosure is truly non-judicial; the procedure does not contemplate any involvement of… Continue Reading

The Absolute Priority Rule in Individual Chapter 11 Bankruptcy Cases lives on … for now

Posted in Bankruptcy, Commercial Lending

The principle behind the absolute priority rule is simple: unsecured creditors should be paid before the debtor is entitled to retain property of the bankruptcy estate. In a corporate setting the absolute priority rule operates to ensure that an unsecured creditor is paid in full before a shareholder is able to retain its ownership interest… Continue Reading

Standing qua Mortgagee: Challenging the Assignment of a Mortgage in Federal Court

Posted in Commercial Lending

Mortgages are big business. When mortgages are assigned, however, the mortgagor often is a non-party to the assignment. Thus, within certain jurisdictions, mortgagors have historically lacked the requisite standing to challenge the validity of the assignment. Recently the First Circuit handed down the decision of Culhane v. Aurora Loan Services of Nebraska, in which they… Continue Reading

Georgia Non-Judicial Power of Sale Foreclosure – Overview of Procedures

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Residential Foreclosure, Residential Real Estate Lending

Given our geographic proximity, it is not uncommon for Florida banks to do business in Georgia or with clients owning property in Georgia. This geographic proximity, however, does not lend itself to equivalence of foreclosure procedures. This is because, unlike Florida, Georgia recognizes non-judicial foreclosures. Indeed, power of sale foreclosures, as they are called, are… Continue Reading

What is an Allonge?

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

Given the importance of the allonge in establishing a bank’s standing in commercial foreclosure cases, you may be surprised that the term “allonge” is nowhere to be found in Florida’s Commercial Code. In one case, the court describes an allonge as “simply an elegant-sounding legal term for a supplemental attachment to a note in which endorsements… Continue Reading

When the FDCPA and the Bankruptcy Code Conflict: Which Controls?

Posted in Bankruptcy, Commercial Lending, Debt and Judgment Collection

As most lenders and banking litigators understand, courts construe the language of the Fair Debt Collection Protection Act (FDCPA) very broadly. As we have discussed in previous posts, an initial communication to collect a debt must contain specific language that “the debt collector is attempting to collect a debt and that any information obtained will… Continue Reading

Enforcing a Lost Promissory Note

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Dischargeability of Debts, Loan Sales and Syndications, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

In Florida, it is well established that the original promissory note must be surrendered to the court as a condition of its enforcement. What do you do when you cannot find the original promissory note? Florida Statutes 673.3091 sets out a procedure to follow in order to  “reestablish” a lost note and provides that a… Continue Reading

The Perils of Post-Judgment Pre-Sale Modifications

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Loan Workouts, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

A reasonable workout often remains the prudent choice for defaulted commercial real estate loans even in the context of a pending (or nearly completed) foreclosure action. Thus, it is not surprising that we have seen a number of foreclosure cases where the bank and debtor entered into a modification agreement after obtaining a foreclosure judgment… Continue Reading

Amendment to UCC Filing Requirements

Posted in Commercial Lending

Florida’s Uniform Commercial Code was subject to some recent changes and revisions which became effective on July 1, 2013. One change in particular was to Florida Statute § 679.5 16 which governs the UCC filing requirements in order to have an effective financing statement. The statute’s amendment has changed the minimum requirements for the UCC… Continue Reading