In a typical lender-borrower relationship, the lender owes the borrower no fiduciary duty. However, this general rule is set aside when the lender knowingly undertakes to act on behalf.
A lender’s successful enforcement of loan documents following one or more events of default turns on a variety of factors, the most important of which is compliance with the terms of.
While a distressed borrower may feel the lender is giving the borrower advice, a lender must remain focused on strictly adhering to the terms of its loan documents, preserving collateral, and ensuring the borrower remains independent and in full control of its operations.
On December 23, 2021, Judge Stacey Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas issued a verdict, following a bench trial, in favor of the Chapter 7 trustee.
A recent decision from the U.S. Bankruptcy Court for the Northern District of Texas illustrates that aggressive lender action can lead to “lender liability” in a loan workout. Bailey.