Forbearance Agreement Consideration
Not only is it important that the leniency agreement recognizes the validity and applicability of the lender`s security by the debtors, but it could also be the lender`s last opportunity to remedy any defects in its position. Prior to the leniency negotiations, the lender should have had its credit and security documents reviewed by legal advisors and be aware of any gaping deficiencies in its position – be it the failure to provide guarantees and other documents in the credit agreement, the identification of unregistered or unremarkable security interests, or the painful realization that there are not enough achievable guarantees to cover the package. ease. Since the debtor needs time or other housing, the lender should have the leverage to impose the necessary compliance to remedy any technical defects. Perhaps the first question should be whether, in the present circumstances, an indulgence agreement is appropriate or not. If, in principle, the debtor is in good health and needs only time to resume acceptable business activities, the lender should consider amending existing loan contracts. If the objective is to “start” the client and his prospects of setting up a replacement lender, a single notice of transfer may be required. However, in the event of materialized failures, appropriate leniency conditions must be formalized. The transition from potato farming to carrot farming proved catastrophic: Orville lost its crop and had no crop insurance. The Credit Union has issued its statements of intent on the implementation of security, the parties went through farm debt mediation without success. Finally, the Credit Union and the Lewis Company entered into a leniency agreement and Ms. Ella Lewis received independent legal advice prior to executing the documents.
When the leniency period expired, the credit union acted with the execution of the mortgages, after which Lewis` request to bring a cease-and-deseal action was filed to prevent the sale of mortgages.