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    Michigan Nonrecourse Mortgage Loan Act to be sent to Governor for signature
    2012-03-21

    Earlier this month, we reported to you on the bipartisan legislation introduced in the Michigan Legislature known as the Nonrecourse Mortgage Loan Act (the “Act”).  

    The Act has been approved overwhelmingly by both chambers of the Michigan Legislature and will be presented to the Governor’s office for signature. It is expected that the legislation will be signed into law within the next several business days.  

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Dykema Gossett PLLC, Wells Fargo
    Authors:
    Adam Fishkind , Brian J. Page , Steven C. Liedel
    Location:
    USA
    Firm:
    Dykema Gossett PLLC
    Recent decisions on non-recourse carve-outs in CMBS loans
    2012-03-19

    Recent court decisions in the state of Michigan—Wells Fargo Bank, NA v. Cherryland Mall, ____ N.W.2d _____, 2011 WL 6785393 (Mich.App. 2011) (Cherryland) in the Michigan intermediate appellate court and 51382 Gratiot Avenue Holdings Inc. v. Chesterfield Development Company, 2011 U.S. Dist. LEXIS 142404 (E.D. Mi. Dec.

    Filed under:
    USA, Michigan, Banking, Insolvency & Restructuring, Litigation, Securitization & Structured Finance, Alston & Bird LLP, Surety, Debtor, Debt, Liability (financial accounting), Commercial mortgage-backed security, Wells Fargo
    Authors:
    Robert J. Sullivan
    Location:
    USA
    Firm:
    Alston & Bird LLP
    Legislation proposed in State of Michigan to declare solvency covenants of non-recourse loans unenforceable
    2012-03-07

    A proposed bill entitled the Nonrecourse Mortgage Loan Act and recently introduced to the Senate for the State of Michigan would regulate the use and enforceability of certain loan covenants in non-recourse commercial transactions. Presumably, the bill, Senate Bill No. 992 introduced on Feb. 29, 2012 and referred to the Committee on Economic Development, is in reaction to a recent decision of the Michigan Court of Appeals finding a guarantor liable for a deficiency claim notwithstanding the non-recourse nature of the loan. See Wells Fargo Bank, NA v. Cherryland Mall Ltd.

    Filed under:
    USA, Michigan, Banking, Insolvency & Restructuring, Litigation, Barnes & Thornburg LLP, Surety, Debtor, Mortgage loan, Wells Fargo
    Authors:
    John T. Gregg , Patrick E. Mears , Kenneth W. (Ken) Vermeulen
    Location:
    USA
    Firm:
    Barnes & Thornburg LLP
    Borrower beware: violation of solvency covenant transforms non-recourse loan into full-recourse loan
    2012-03-08

    In a recent Michigan Court of Appeals case, Wells Fargo Bank N.A. vs. Cherryland Mall Limited Partnership et al., (2011 WL 6795393), the court found that the borrower’s violation of a solvency covenant triggered the conversion of the borrower’s and guarantor’s non-recourse obligations to full- recourse obligations. In light of the decision, when negotiating a non-recourse loan, parties would be well advised to pay close attention to the recourse covenants and to be very clear about which covenants, if breached, would trigger full recourse.

    Background

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Holland & Knight LLP, Debtor, Wells Fargo
    Location:
    USA
    Firm:
    Holland & Knight LLP
    Commercial division rules on enforceability of liquidated damages clauses
    2012-02-13

    In Wells Fargo Bank Northwest v. US Airways, Inc., 2011 NY Slip Op 52188(U) (Sup. Ct. N.Y. County Dec. 1, 2011), Justice Bernard J. Fried held that a liquidated damages provision requiring payment of a holdover fee equal to twice the monthly rent was reasonable and did not function as a penalty under New York contract law. The case arose from three aircraft sale and leaseback transactions, pursuant to which Defendant US Airways, Inc. (“US Airways”), sold to Plaintiff Wells Fargo Bank Northwest (“Wells Fargo”), and Wells Fargo leased back to US Airways, three Boeing 737 aircraft.

    Filed under:
    USA, New York, Aviation, Insolvency & Restructuring, Litigation, Sheppard Mullin Richter & Hampton LLP, Liquidated damages, Wells Fargo
    Authors:
    Tyler E. Baker
    Location:
    USA
    Firm:
    Sheppard Mullin Richter & Hampton LLP
    Massachusetts Attorney General criticizes multistate settlement efforts over banks' foreclosure practices
    2011-10-31

    Dissatisfied with the ongoing multistate and federal efforts to reach a settlement agreement with major U.S. banks over unlawful foreclosure practices, Massachusetts Attorney General Martha Coakley indicated that her office was independently preparing to file several lawsuits. A number of U.S. states, along with the U.S. Department of Justice, have accused the five largest mortgage servicers, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Ally Financial and Wells Fargo & Co., of failing to follow proper foreclosure procedures.

    Filed under:
    USA, Massachusetts, Banking, Insolvency & Restructuring, Sedgwick LLP, Mortgage loan, Foreclosure, US Department of Justice, Wells Fargo, JPMorgan Chase, Bank of America, Ally Financial, Citigroup, New York Attorney General, Massachusetts Attorney General, California Attorney General
    Authors:
    Eric C. Scheiner , Jennifer Q. Broda , Thomas R. Orofino , Jennifer Hamilton , Matthew M. Ferguson
    Location:
    USA
    Firm:
    Sedgwick LLP
    Improper Calculation of Postpetition Interest Leads to Reversal of a Confirmation Order
    2016-04-19

    Postpetition interest is a thorny area of bankruptcy law.  The myriad rules, coupled with the inconsistent way in which they are often applied, provide fodder for litigation and opportunity for confusion.  

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bankruptcy, Interest, Foreclosure, Wells Fargo, Ninth Circuit, Bankruptcy Appellate Panel
    Authors:
    Scott Bowling
    Location:
    USA
    Firm:
    Weil Gotshal & Manges LLP
    Fourth Circuit Finds That Bankruptcy Court Sale Orders Should Be Granted Preclusive Effect
    2016-03-18

    In Providence Hall Associates Limited Partnership v. Wells Fargo Bank, N.A., the Fourth Circuit denied plaintiff’s attempt to receive a second bite at the apple, finding that plaintiff’s lawsuit was appropriately dismissed by the district court on res judicata grounds.

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Res judicata and issue estoppel, Wells Fargo, United States bankruptcy court, Fourth Circuit, Sixth Circuit
    Location:
    USA
    Firm:
    Weil Gotshal & Manges LLP
    Wells Fargo sanctioned by Bankruptcy Court for subprime lending role
    2008-05-13

    A federal bankruptcy judge has ordered Wells Fargo to pay $250,000 in sanctions for its role as a trustee for a pooled subprime mortgage trust. In re: Nosek, Case No. 02-46025-JBR (Bankr. D. Mass.).

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Locke Lord LLP, Bankruptcy, Debtor, Collateral (finance), Security (finance), Subprime lending, Mortgage loan, Misrepresentation, Mortgage-backed security, Wells Fargo, Trustee, United States bankruptcy court
    Location:
    USA
    Firm:
    Locke Lord LLP
    Recent bankruptcy litigation pulls in mortgage lenders
    2008-06-10

    Adjustable rate mortgages began to reset just as the economic outlook for subprime borrowers soured. Defaults on subprime debt inevitably followed. The onslaught of litigation against all players in the subprime lending arena followed just as inevitably.

    Filed under:
    USA, Banking, Insolvency & Restructuring, Litigation, Reed Smith LLP, Bankruptcy, Debtor, Collateral (finance), Class action, Swap (finance), Subprime lending, Debt, Mortgage loan, Default (finance), Credit default swap, Wells Fargo, United States bankruptcy court
    Location:
    USA
    Firm:
    Reed Smith LLP

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