Possession for Lenders is Not 100% of the Law

Finance and restructuring partner Andrew Kassner and counsel Joseph Argentina co-authored an article for The Legal Intelligencer titled, “Possession for Lenders is Not 100% of the Law.”

This article discusses two court cases where lenders were forced to return payments they had received, highlighting the risks lenders face in bankruptcy situations even when payments are made under legal agreements.

In the two cases discussed by the authors, the first involved a lender who was ordered to refund adequate protection payments after it was determined their collateral value was sufficient to cover their claims. In the second, a lender was forced to return loan payments, plus 12 years of prejudgment interest, because the loan was deemed a fraudulent transfer that did not provide value to the debtor.

These two decisions provide reminders to lenders in two different and perhaps opposite situations—one where the real estate debtor was rendered insolvent and the other where the debtor was ultimately clearly solvent based on the value of the real estate.

The full article is available to The Legal Intelligencer subscribers.