News & Analysis as of

Non-Recourse Loans

Goodwin

CFPB Departs From Precedent and Reverses Itself by Proposing Novel Interpretive Rule That Applies TILA and Regulation Z to...

Goodwin on

On July 18, 2024, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule (Proposed Rule) applying the Truth in Lending Act (TILA) and Regulation Z (collectively referred to hereafter as Regulation Z) to...more

Morrison & Foerster LLP

Scrivener’s Error in Guaranty Reformed Outside of Statute of Limitations and Held Enforceable

In an appeal heard by the Appellate Division of the Supreme Court in the First Judicial Department of New York, the Court recently ruled that a court may reform a guaranty after the statute of limitations for a reformation of...more

Mandelbaum Barrett PC

Three Major Differences Between Recourse and Non-Recourse Loans

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Borrower / Guarantor Liability Recourse – The borrower (or guarantor) is personally liable for the full amount of the loan, including any debt remaining after the collateral is foreclosed upon and sold. To satisfy the...more

ArentFox Schiff

Non-Recourse Carve-Outs: Borrower and Guarantor Considerations

ArentFox Schiff on

The Federal Reserve's most recent Financial Stability Report addressed what many industry watchers had been convinced of for some time: the commercial real estate sector is in a precarious state. The Federal Reserve Bank...more

Rivkin Radler LLP

Partnership Losses But No Outside Basis? Too Bad

Rivkin Radler LLP on

Losses Weren’t Always Bad- Most tax advisers are aware that, prior to the Tax Reform Act of 1986 (the “TRA”),[i] the Code placed few limitations on the ability of an individual taxpayer to use deductions from a particular...more

Troutman Pepper

Arizona AG Concludes Non-Recourse, No-Interest Earned Wage Access Products Are Not “Consumer Lender Loans” Requiring a License

Troutman Pepper on

Arizona Attorney General Mark Brnovich released opinion No. 22-(R22-011), concluding earned wage access (EWA) products that are fully non-recourse and no-interest are not “consumer lender loans” under Arizona law. Thus, those...more

Sheppard Mullin Richter & Hampton LLP

AZ Attorney General Concludes Non-Recourse EWA Not a Loan

On December 18, the Arizona Attorney General issued an opinion on earned wage access (EWA), which determined that fully non-recourse EWA products do not constitute consumer loans subject to consumer loan regulations, and...more

Ballard Spahr LLP

Arizona AG issues opinion concluding that no-interest, non-recourse earned wage access products are not “consumer lender loans”...

Ballard Spahr LLP on

Mark Brnovich, the Arizona Attorney General, recently issued an opinion regarding whether earned wage access (EWA) products are “consumer lender loans” under the state’s Consumer Lenders Act (CLA) such that a person who...more

Cadwalader, Wickersham & Taft LLP

See You in September August 2021 - Limited Recourse Finance Series, Part 2: Structural Features

In Part Two of our series on limited recourse finance in the European real estate finance market, we look at the structural features....more

Cadwalader, Wickersham & Taft LLP

Summer Reading July 2021 - Limited Recourse Financing Series: The Need for Limited Recourse Structures

Limited recourse financing (also sometimes referred to as “non-recourse”) is a very common structure adopted in real estate financing transactions in Europe. The principle around limited recourse financing is essentially...more

Faegre Drinker Biddle & Reath LLP

Non-Recourse Guaranties in the Age of COVID-19

When engaging in real estate loan transactions, insurance company lenders often undertake a robust underwriting process that focuses on the value and marketability of the real property that serves as collateral for the loan....more

Pillsbury Winthrop Shaw Pittman LLP

Distressed Real Estate During the COVID-19 Pandemic: Deeds in Lieu of Foreclosure Involving Commercial Real Estate

In a deed in lieu of foreclosure, a defaulting borrower agrees to convey the mortgaged property to the mortgage lender. But handing over the keys can raise a number of potential pitfalls. Below, we discuss some of these...more

Bass, Berry & Sims PLC

Nonrecourse Loan Pitfalls During the COVID-19 Pandemic

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Real estate borrowers often prefer nonrecourse loans, which can eliminate or reduce the risk of having to satisfy a deficiency judgment if a project goes bad. However, most nonrecourse loans have carve-outs or exceptions to...more

Woods Rogers

Guarantor Provisions to Negotiate in Non-Recourse Financing

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Many commercial real estate loans are “non-recourse,” which means in general terms that foreclosing on the real estate securing the loan is the lender’s sole remedy for a borrower’s failure to repay the loan.  The lender is...more

A&O Shearman

(In)Eligible Filer: Bankruptcy Court Dismisses Involuntary Bankruptcy Filing Against Taberna for Failure of Non-Recourse Creditors...

A&O Shearman on

On November 8, 2018, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued a decision dismissing an involuntary chapter 11 case filed against Taberna Preferred Funding IV,...more

Kramer Levin Naftalis & Frankel LLP

Court Holds that Holders of Nonrecourse Debt Do Not Have Standing to File Involuntary Bankruptcy Petition

The Bottom Line - The Bankruptcy Court for the Southern District of New York recently held in Taberna Preferred Funding IV, Ltd. v. Opportunities II Ltd. (In re Taberna Preferred Funding IV, Ltd.), No. 17-11628 (MKV),...more

Dechert LLP

Section 1111(b) Election Not Available When Collateral Is Sold Post Petition

Dechert LLP on

The facts in Salamon are straightforward. Salamon (“Buyer”) purchased real property from Behrend (“Seller”) that was already subject to two liens (the “Preexisting Debt”). Instead of paying cash at closing, the Buyer executed...more

Latham & Watkins LLP

IRS Tightens Rules on Disguised Sales and Allocating Partnership Liabilities

Latham & Watkins LLP on

New final, temporary and proposed regulations address leveraged transactions, “bottom-dollar” guarantees and other issues, but postpone action on some key questions. On October 4, 2016, the Internal Revenue Service (IRS)...more

Skadden, Arps, Slate, Meagher & Flom LLP

New Regulations Dramatically Alter Partnership 'Disguised Sales' and Allocation of Partnership Liabilities

On October 4, 2016, the Internal Revenue Service and the Treasury Department issued a sweeping package of proposed, temporary and final regulations under the Internal Revenue Code that, among other things, significantly...more

Allen Matkins

These Loans Can Be Problematical Even When The Borrower Isn’t An Officer or Director

Allen Matkins on

I spent most of last week discussing California Corporations Code Section 315. As a reminder, that statute prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of,...more

Mintz

Good News on “Bad Boy” Guarantees – IRS Reverts to Prior Position in Recent Legal Advice Memorandum

Mintz on

On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the...more

Holland & Knight LLP

West Coast Real Estate Update: May 2016 #1

Holland & Knight LLP on

IRS Reevaluates "Bad Boy" Carve-Outs - Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require...more

Miles & Stockbridge P.C.

New Guidance on Bad Boy Guarantees

The IRS Office of Chief Counsel recently released a memorandum (#AM2016-001) addressing the proper tax treatment of nonrecourse carve-outs (or bad boy guarantees) in the partnership context. According to the memorandum, such...more

Locke Lord LLP

Tax and Non-Tax Reasons to be Cautious about “Bad Boy Nonrecourse Carve-out Guarantees” - IRS Backtracks on Recent Conclusion that...

Locke Lord LLP on

On April 15, 2016 the IRS reversed its controversial position that bad boy guarantees may convert nonrecourse debt into recourse debt. General Legal Advice Memorandum Number AM2016-001 released April 15, 2016 effectively...more

Butler Snow LLP

IRS Reverses Position on “Bad Boy” Guarantees

Butler Snow LLP on

Earlier this year, the IRS issued Chief Counsel Advice 201606027 (February 5, 2016) concluding that, for purposes of the basis and at-risk limitations, an LLC member’s guarantee of entity-level nonrecourse debt conditioned...more

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