An Illinois Court's Lesson For Senior Lenders

On April 27, 2017, in Bowling Green Sports Center v. GAG LLC, an Illinois appellate court, adopting the reasoning of courts in Missouri, New York and Massachusetts, held that, in the absence of an intercreditor agreement stating otherwise: (1) if a senior lender modifies the terms of an underlying note or mortgage without the consent of the junior lender, the senior lender will relinquish its priority with respect to the additional loaned amounts and (2) if the modification substantially impairs the junior lender’s security interest, “a...

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