Worldwide Economic And Credit Crisis Does Not Provide A Basis To Force A Renegotiation Of Loan Documents


In a recent case in the Commercial Division of the Supreme Court of the State of New York, Justice Bransten granted the lender’s motion for a $50 million summary judgment in lieu of complaint pursuant to CPLR §3213 based upon promissory notes and a guaranty, because borrowers failed to carry their burden to establish any viable defense. See KBS Preferred Holding I LLC v. Petra Fund REIT Corp., Index No. 601836/09 (Sup Ct, NY County, May 3, 2010) (“KBS”)."

Specifically, there was no dispute that “the Notes and Guaranty qualify as instruments for the payment of money only,” and there was also no dispute as to their execution and payment default. KBS at 13. Therefore, because the plaintiff lender “established a prima facie case pursuant to CPLR §3213,” the borrowers had the burden to “demonstrate the existence of a triable issue of fact relative to a bona fide defense.” KBS at 13-14.

The Court rejected each of the borrowers’ three defenses.

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