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California Court Rejects “Sham Guarantee” Defense

Editor’s Note:  Bank Bryan Cave is going into its ninth year as one of the nation’s leading blogs on financial institution regulatory, M&A, securities, and litigation issues.  Here’s a recent post on Bryan Cave’s successful work for the California Bankers Association (“CBA”), headed up by Joseph Poppen of BC’s San Francisco office.

 

Bryan Cave LLP recently served as counsel for amicus curiae California Bankers Association (“CBA”) and helped score a victory in an important California appellate case of great interest to the banking industry, LSREF2 Clover Property 4 LLC v. Festival Retail Fund 1 357 N. Beverly Drive LP (Second District, California Court of Appeal case number B259937) (Link to the opinion is here).

The trial court had ruled that the guarantor of a commercial loan was excused from performance on the grounds that the guaranty was a “sham,” structured by the lender

Banks and Marketplace Lenders Absorb a Blow Under the Supreme Court’s Refusal to Hear Madden v. Midland Funding, LLC

July 21, 2016

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Editor’s Note:  Our great friends at BankBryanCave, one of the top blogs out there for banking, regulatory, financial institution M&A, and related banking matters, allowed us to cross-post this compelling post on the impact of  the Supreme Court’s denial of cert of the 2nd Circuit’s decision in Madden.  We think this is pretty important stuff, especially for parties in the consumer debt secondary market.  

In a blow to banks and the marketplace lending industry, on June 27, 2016, the U.S. Supreme Court denied the petition by Midland Funding to hear the case Midland Funding, LLC v. Madden (No. 15-610).  That case involves a debt-collection firm that bought charged-off credit card debt from a national bank.  The borrower’s legal team argued that a buyer of the debt was subject to New York interest rate caps even though the seller of the debt, a national bank, was exempt from those state law rate caps due

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