Business Loan with inadequate collateral
A bank mistakenly over values the collateral on offer and lends too much money; and on the basis of this establishes financial covenants which are onerous to the borrower. Repayments are met but covenants are breached from the time of loan closing. The business is put under exaggerated cashflow pressure and is materially damaged. The bank places the loan in special assets, further damaging the business viablility. Is the bank's error in mistakenly valuing collateral and lending too much actionable by the borrower. The borrower paid the bank's attorney fees at closing and provided full disclosure to the bank during the applicaton process. The bank was competing for the loan. Had the bank offered to lend a smaller amount the borrower would have accepted.
1 Answer from Attorneys
Re: Business Loan with inadequate collateral
Lender liability may be in issue. Need more detrails to fully advise. I have extensive experience in business debtor-creditor matters.
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