Commercial Lender Left Without Collateral After Borrower Defaults

ByVictoria Negron

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Updated onApril 10, 2018

Commercial Lender Left Without Collateral After Borrower Defaults

This industrial loan case involves a lawsuit against an attorney who represented a lender. The lender was making a loan to be secured by several properties. After the loan was made, the borrower defaulted and it was learned that the borrower did not own the properties. The lender’s attorney used a form suitable for a blanket loan but did not properly adapt this form to a loan to be secured by specific properties. As a result, the loan documents did not contain any representation that the borrower owned the property at the time of the loan. The lender argues that if this effort had been made, the attorney would have discovered that the borrower did not own the properties before closing, and the loan would not have been made. An attorney with substantial experience in closing commercial/industrial asset-based loans was asked to testify to industry norms when making loans that are secured by equipment

Question(s) For Expert Witness

1. Do you routinely close commercial/industrial asset-based loans?

2. What is the advising attorney's duty to ensure that loan collateral is actually owned by the borrower?

3. What additional steps could the attorney have taken in order to protect their client's interests?

Expert Witness Response E-062594

inline imageI am a financial institutions and funds lawyer focused on conventional and structured finance. I currently advise clients on deals and transactions involving financial assets and loans backed by those assets. I have 30+ years of experience in the U.S. mortgage markets, conventional finance, and structured finance. In my current practice, I also serve as an expert witness on finance cases. I was recently involved in a similar case that grew out of the financial crisis. A firm was purchasing a company whose value was pegged to its assets, which deteriorated. In that case, I assisted the lawyers being accused of malpractice. In this instance, I think the lender's council would normally perform some kind of search/evaluation that would reveal ownership of the collateral.

About the author

Victoria Negron

Victoria Negron

Victoria Negron has extensive experience in journalism and thought leadership in the legal space, with a background crafting content, whitepapers, webinars, and current event articles pertaining to the role of expert witnesses in complex litigation matters. She is a skilled professional specializing in B2B product marketing and content marketing. Currently, she serves as an Enterprise Product Marketing Manager at Postman, and previously held the position of Technical Product Marketing Manager at Palantir Technologies, where she developed her skills in launch strategies, go-to-market strategy, and competitive analysis.

Her expertise in content marketing was further refined during her tenure at the Expert Institute, where she progressed from a Marketing Writer to Senior Content Marketing Manager, and eventually to Associate Director of Content & Product Marketing. In these roles, she honed her abilities in digital marketing, SEO, content strategy, and thought leadership.

Educationally, Victoria holds a Master of Business Administration from the University of Florida - Warrington College of Business and a Bachelor of Arts in Literature, Art, and Hispanic Studies from Hamilton College. Her diverse educational background and professional experience have equipped her with a robust skill set in product marketing, content development, and strategic marketing initiatives.

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