Banking & Financial Services Industry Legal Blog

Lenders and trade vendors often sagely require personal guarantees from the insiders of their debtor. In the event of debtor bankruptcy, a creditor may look to the insider-guarantor to satisfy the debt. The creditor’s ability to be made whole, then, is directly related to the financial position of the insider-guarantor. There is a problem: the Deprizio doctrine can erode the insider-guarantor’s financial position. Under the doctrine, the bankruptcy Trustee may disgorge assets from the guarantor that could otherwise satisfy the debt. Luckily, there is a solution to the Deprizio problem: a carefully crafted guaranty agreement that waives the guarantor’s claim against the bankruptcy debtor. This blog post explains the problem and clarifies the solution.

The economy, to put it lightly, has not been the best in the recent years. One potentially lucrative by-product of the economic downtown was the opportunity for prospering banks to acquire failed banks from the FDIC at an incredible discount. The purchasing bank, in acquiring the failed bank, will likely enter into a Loss-Share Agreement (LSA) with the FDIC. Essentially, Loss-Share Agreements give the purchaser the benefit of the FDIC absorbing a large percentage of the losses realized on the acquired receivables. The purchasing bank, generally speaking, only incurs around 20% of the losses with the FDIC incurring the remaining 80%. While this seems like a “no-brainer” agreement, entering into a LSA—much like every contract—requires scrutiny to maximize revenue and avoid potential lawsuits. Beyond the general advice of reading every word prior to signing a contract, this Blog post identifies five things an inquiring bank needs to know about LSAs.

What do you do when a client comes to you stating that a default final judgment was entered against them and they want out of it? The answer is you move to set it aside for cause, which is a viable plan of action under state law as well as federal bankruptcy law. Entry of a final judgment after default is not necessarily the end of the road for your client. In certain circumstances, it may just be the beginning.

Previously we have explored: a) successful defenses to enforcement of personal guaranties, b) unsuccessful defenses to enforcement of personal guaranties, c) language requirements for personal guaranties, and lastly we will explore the obligation of an alleged guarantor when a personal guaranty is forged.

Most of the cases alleging an insufficiently drafted  personal guaranty concern corporate officers guarantying corporate debt, and the officer’s  subsequent defense that he was signing in a strictly representative capacity.  In deciding these cases, courts have also outlined the language requirements for a valid guaranty. This post is the third […]

This post is the second part of a two part series examining defenses to enforcement of personal guaranties in Florida. Part one identified successful defense to enforcement of a guaranty and can be found here. Part two seeks to analyze defenses that have been unsuccessfully asserted in defense of personal guaranty enforcement.

A personal guaranty is a contract signed by an individual wherein the guarantor affirms his or her personal obligation on a loan or some other debt obligation, such that if the original debtor becomes unable to pay the debt, the guarantor is personally liable for that debt and is legally responsible for its repayment. In a typical case, a President, CEO, or other officer signs a personal guaranty for the debts of his or her business and becomes personally liable for the debt if the business doesn’t pay it off. Florida case law demonstrates that a simple, but well-drafted personal guaranty that specifically enumerates the personal nature of the debt assurance is adequate to form a legal, binding personal guaranty. This Blog post seeks to identify successful defenses utilized in Florida case law to consider when drafting or seeking to enforce personal guarantees.

We are often asked, what, if any, existing legal right in collection does an aggrieved victim have against a defendant who was ordered to pay restitution in a preceding criminal action? In short, an aggrieved party that is either the State or named as a victim in a resulting criminal Restitution Order has an enforceable right to restitution identical to a judgment holder. Being the named victim in the Restitution Order directs the offender to pay restitution for this person’s benefit and the victim is allowed to enforce that right through the civil collection process. To perfect that right, a victim may do many things, including filing a Civil Restitution Lien to attach to property acquired by the offender after the Restitution Order is issued. This Lien lasts for twenty (20) years.

When a company enters into Chapter 11 bankruptcy, the purpose is to reorganize the business so it can manage existing debts and hopefully come out a healthier business.  But operations do not stop the day bankruptcy is filed.  The business keeps on running, which means expenses continue to accrue after […]

On September 25, 2013, Florida’s Second District Court of Appeal issued an opinion regarding a very familiar topic in Florida – a plaintiff’s standing to file and maintain a foreclosure action. In Focht vs. Wells Fargo Bank, the Second DCA upheld the long-established precedent that a plaintiff in a foreclosure action must prove that it had standing at the time it filed the foreclosure complaint in order to maintain the action. 2013 WL 5338048 (Fla. 2d DCA 2013). If plaintiff lacks standing at inception, the defendant can have the case dismissed via summary judgment proceedings. Id.