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Full-Text Articles in Bankruptcy Law
Godzilla Lives! Or, Nonrecourse Carveouts Run Amok, Marshall E. Tracht
Godzilla Lives! Or, Nonrecourse Carveouts Run Amok, Marshall E. Tracht
Articles & Chapters
The author of this article discusses two recent cases which deal with unconditional liability on nonrecourse carveouts and spring-ing guaranties. One potential consequence of these decisions: by essentially converting these contingent guaranties to unconditional guaranties, the threat of springing liability disappears and the guaranties cease to have deterrent effects. If the guarantor is li-able whether or not the single purpose entity files for bankruptcy, why not file? The result is likely to be bankruptcy filings and other "misbehavior" by borrowers. Moreover, the analysis used in these cases would put many performing loans into default along with triggering recourse, threatening substantial …
Single Asset Real Estate And Development Projects: The Kara Homes Mistake, Marshall E. Tracht
Single Asset Real Estate And Development Projects: The Kara Homes Mistake, Marshall E. Tracht
Articles & Chapters
The Kara Homes decision held that various affiliates of Kara Homes, Inc., each of which owned a separate real estate project, were "single asset real estate" ("SARE'') cases under the Bankruptcy Code's definition. According to the author of this article, the designation as single asset real estate substantially increased the difficulty faced by the debtors in maintaining their reorganization efforts, and has given lenders and their counsel a significant amount of comfort. However, the definition runs against the actual wording of the Bankruptcy Code, the intent underlying the SARE provisions, and the political winds. It should, and may well, be …