| Financing commercial real estate transactions on a nonrecourse basis has become common practice in virtually all jurisdictions in the United States. But lenders typically mitigate the risk associated with issuing nonrecourse debt, by requiring a creditworthy entity or individual to personally guaranty either the lender’s losses or the entire debt when certain events take place. These triggers—commonly known as “bad boy” events or “nonrecourse carve-outs”—can expose the guarantors to significant deficiency judgments when the value of the collateral falls short of covering the total debt obligations. Parties often negotiate bad boy guaranties without a complete understanding of how courts will interpret or enforce them. This webinar is designed to provide lenders, borrowers, investors and their legal counsel with an overview of the leading cases on this topic as well as practical tips on how to avoid common misconceptions and pitfalls in drafting and negotiating bad boy guaranties. Key topics will include: - The purposes of bad boy guaranties, and how to draft them to achieve those purposes
- Common provisions in bad boy guaranties, and how courts have enforced or not enforced the applicable language
- The distinction between full recourse and actual loss as those terms are used in bad boy guaranties
- Seminal cases related to bad boy guaranties
Presenters
Barry Lee, Partner, Co-chair, Financial Services Litigation and Enforcement
Jubin Meraj, Partner, Real Estate |
