Question 1

A borrower is in default under our loan agreement. What should our bank consider before entering a forbearance agreement?

Accepted Answer

Before agreeing to forbear, a bank should confirm its collateral position, evaluate the borrower's financial condition, and ensure any forbearance agreement clearly preserves the bank's existing rights and remedies rather than waiving them. MPP Legal drafts forbearance agreements that document the default, extend limited relief on the bank's terms, and protect the bank's ability to pursue collection, foreclosure, or other remedies if the borrower does not perform.

Question 2

Why choose MPP Legal for banking transactions and litigation matters?

Accepted Answer

MPP Legal represents national banks and financial institutions on both sides of the lending relationship — drafting the loan documents, equipment leases, and forbearance agreements that govern a credit relationship, and litigating the disputes that arise when a borrower defaults or a third party interferes with the bank's collateral or investment. That dual perspective allows us to draft agreements built to hold up in litigation and to litigate with a transactional lawyer's understanding of the underlying documents.

Question 3

How can MPP Legal help with banking transactions and disputes?

Accepted Answer

MPP Legal drafts and negotiates loan agreements, promissory notes, security agreements, equipment leases, and forbearance agreements; represents banks in litigation involving banking fraud, breach of fiduciary duty, and violations of funding agreements; and protects banks' secured and priority positions when a borrower files for bankruptcy. Whether the matter calls for a carefully drafted agreement or an aggressively litigated recovery, our team can help protect the bank's investment.

Question 4

What should a loan agreement or credit agreement include to protect our bank?

Accepted Answer

A well-drafted loan or credit agreement should clearly define the bank's collateral position, default triggers, remedies upon default, and the borrower's ongoing covenants and reporting obligations. Gaps or ambiguity in these terms are often what turn a routine default into contested litigation, which is why careful drafting at the outset is one of the most effective forms of risk management available to a lender.

Question 5

What is a forbearance agreement, and when should our bank consider one?

Accepted Answer

A forbearance agreement is a contract in which a bank agrees to delay exercising its rights and remedies against a defaulting borrower for a defined period, typically in exchange for specific conditions such as a repayment plan, additional collateral, or covenants. Banks typically consider forbearance when a borrower's default appears temporary and a negotiated resolution is more likely to preserve the bank's investment than immediate enforcement action.

Question 6

Can banking disputes be resolved without going to court?

Accepted Answer

Yes. Many banking disputes, including defaults, funding agreement disagreements, and disputes over loan terms, are resolved through negotiation, forbearance, or workout agreements. When a resolution cannot be reached, or when banking fraud, breach of fiduciary duty, or bankruptcy is involved, litigation may be necessary to protect the bank's investment and enforce its rights.

Question 7

When should our bank speak with a banking transactions and litigation attorney?

Accepted Answer

A bank should speak with a banking transactions and litigation attorney when negotiating a significant loan or lease, when a borrower defaults or shows signs of financial distress, when a borrower or related party files for bankruptcy, or when the bank suspects fraud, breach of fiduciary duty, or a violation of its funding agreements. Early legal guidance can help preserve the bank's collateral position and improve the likelihood of a favorable recovery.

Banking Transactions and Litigation

Banking Transactions and Litigation Attorneys

Need Help? Let’s Get in Touch

Banking Transactions and Litigation Attorneys

Need Help? Let’s Get in Touch

Insolvency Litigation