March 15, 2011
Authored by: Bryan Cave Leighton Paisner
One of the unique aspects of the current real estate downturn has been the large number of disputes over participation agreements. While these disputes have occurred in the past, the current downturn has produced more and varied disputes, especially disputes between originating banks and participating banks, than we have previously seen even during other challenging times.
As a result, the various form participation agreements and the standard terms contained in those agreements have undergone considerable scrutiny both inside and outside of litigation. Many Bryan Cave lawyers, including Jerry Blanchard, Bill Custer, or Jennifer Dempsey, have advised numerous banks on all aspects of these agreements and have represented parties in a number of these disputes including:
- Representing originating/lead banks in disputes brought by participant banks regarding the administration of the loan.
- Representing participant banks in disputes with originating/lead banks regarding the administration of the loan.
- Enforcing provisions requiring the repurchase of a participant bank’s interest in a loan by an originating bank as a result of the originating bank’s fraud.
- Representing groups of up to 60 loan participants in collection actions against borrowers.
- Providing general advice regarding questions about the interpretation of loan participation agreements.
- Providing advice when the lead position in a loan participation was assigned by the FDIC as Receiver to a third party under circumstances where the validity of the transfer was in question or the assignee was a non-bank with markedly different standards of administration.
- Providing advice on the effect of receiverships and loss share arrangements on participation agreements.
- Providing advice on the forced removal of lead banks.
The attorneys at Bryan Cave are here to help you with your questions regarding loan participations, whether your bank serves as the originating bank or as a participant bank.
In the event you have a dispute involving any of the above, or merely want to discuss your questions with an attorney, please call Jerry Blanchard, Bill Custer, or Jennifer Dempsey at (404) 572-6600. They will be happy to discuss your questions with you to help you better understand your options.