Recent Rulings Add More Bite To Bad Boy Guaranties

Law360, New York (November 8, 2011, 2:54 PM EST) -- Bad boy guaranties designed to protect commercial real estate lenders from borrowers' bankruptcy filings have been strengthened by two recent court rulings proving the agreements to be steel traps even for guarantors claiming to have good intentions, experts say.

Dashing borrowers' hopes of striking down guaranties spring-loaded for bankruptcy filings, a New York state court has upheld versions of the agreements exactly as written in two separate cases so far this year, bolstering the defensive power of bad boy or "springing recourse" guaranties that make guarantors...
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