Lender Liability: Defending Against Attacks on Loans in Workout, - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Lender Liability: Defending Against Attacks on Loans in Workout, Modification, Default and Bankruptcy Lessons From Recent Financial Litigation and Best Practices for Evaluating and Minimizing Claims WEDNESDAY, JANUARY 15, 2014 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Zachary G. Newman, Partner, Hahn & Hessen , New York Richard Donovan, Member, Rose Law Firm , Little Rock, Ark. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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January 15, 2014 LENDER LIABILITY: DEFENDING AGAINST ATTACKS ON LOANS IN WORKOUT, MODIFICATION, DEFAULT AND BANKRUPTCY LESSONS FROM RECENT FINANCIAL LITIGATION AND BEST PRACTICES FOR EVALUATING AND MINIMIZING CLAIMS

This CLE live web seminar will analyze the most common types of lender liability claims, discuss how they are being asserted in various phases of the lending cycle and in bankruptcy, and explain lessons learned from recent financial litigation. The panel will outline best practices to minimize and avoid the risk of lender liability claims. Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A. 6

Your Moderator Zachary represents public and private accountings, Prudent Investor Act companies, national banking claims, and breach of fiduciary duty associations, commercial lenders, leasing claims); and companies, and hedge funds in business  Art and Antique Litigation (national litigation throughout the United States. and international reacquisition of lost His practice focuses on or stolen art, repossessions and liquidations, and disputes regarding  Banking Litigation (enforcing multi- valuations, fraudulent auctions, million dollar credit facilities on behalf consignor-lender issues, and lien of national and regional banks and priority). institutional and specialty lenders, 212.478.7435 securing provisional remedies, and Znewman@ defending lender liability litigation); Fordham University School of Law (’94) hahnhessen.com  Commercial Litigation (litigating Co-Chair, Litigation Management contract disputes, commercial Subcommittee of the America Bar insurance claims, aircraft lease Association Corporate Counsel disputes, unfair competition and Committee restrictive covenants, bankruptcy New York Metro Area Super Lawyers disputes, and judgment 2011, 2012, and 2013 enforcement);  Fiduciary Litigation (contested 7

Guest Speaker Richard Donovan Best Lawyers in America - 2006-2014 Pulaski County, Arkansas, and American Editions - Commercial Litigation; Bet-the- Bar Associations; Member, American Company Litigation, Litigation - Banking & Board of Trial Advocates; Master of the Finance, and Litigation – Securities Bench, Henry Woods American Inn of Court; St. Thomas More Society, Member Chambers USA Leading Lawyers, 2004- 501.377.0325 2013, Litigation: General Commercial University of Arkansas, Bachelor of Arts, rdonovan@ University of Arkansas, Juris Doctor roselawfirm.com Mid-South Super Lawyer Top 50 Lawyers (honors) in Arkansas, 2011-2013 Member, Arkansas Law Review 8

Introduction to Our Program 9

SCORECARD  Banking, lending, financial services, and private equity have been subject to substantial criticism:  Websites ( e.g. , stopgreedybanks.com)  Courts  Borrowers  Editorials  Blogs  The current economic environment has created heightened tensions between lenders and borrowers 10

ELECTED & COURT OFFICIALS ARE NOT RELUCTANT TO SPEAK THEIR MIND  Representative Barney Frank, Chair of House Financial Services Committee, recently had a “blunt” statement to Bankers:  “People really hate you, and they’re starting to hate us because we’re hanging out with you.”  http://www.politico.com/news/stories/0209/18372.html  In an Orange County mortgage modification case, Justice Catherine M. Bartlett cut off the bank lawyer who argued the proper documentation was not submitted and noted:  You, she said, are telling me lies … [The bank] got a bailout, and this is an outrage, how this man has been treated … Hard -working, middle-class Americans are trying to make it, trying to refinance with your bank … Either bank officials show up in person, or I’m going to order them here in handcuffs. 11

“HE MUST HAVE DONE IT BECAUSE THEY DID IT”  From A Recent Brief Filed By A Borrower (A Lawyer, And A Former Bank Executive):  Through its acts and omissions, [the Bank] – like so many mortgage lenders and other banks in recent years – acted in bad faith and/or negligent manner to the detriment of [us borrowers] ....  While courts in New York and elsewhere are holding lenders accountable for such conduct, [the Bank] nevertheless seeks to shield itself from the consequences of its own actions .... 12

WHY THE RISE IN CLAIMS? HERE ARE SOME CONTRIBUTING FACTORS  Borrowers are defaulting  Distressed loans  Secondary markets and assignments  Constriction of availability / deepening insolvency  Busy court dockets  Deep pockets become the focus  The plaintiff’s bar  Club deals - participations - syndicated loans  Underwriting criteria  Health of the loan documents 13

LAWYER ADVERTISING AND BORROWERS FLEXING THEIR MUSCLES  Google Answers Post:  I am looking for examples of borrowers who have (successfully) sued banks for issuing them a highly risky loan. I'd appreciate any pointers to U.S. legal precedence for action taken against a bank for giving someone a risky loan.  http://answers.google.com/answers/threadview?id=531128  Times Magazine :  Do banks, those powerful and wise institutions, sometimes behave like bullies? While quite a few borrowers would say yes, U.S. banks have long seemed virtually immune to retaliation for heavy-handed tactics. Now, however, hundreds of borrowers are taking their lenders to court and winning.  http://www.time.com/time/magazine/article/0,9171,967374,00.html 14

THE STIGMA OF AFFIRMATIVELY ACKNOWLEDGING A DEBT IS NON-EXISTENT  Danny Tarkanian, a U.S. Senate candidate, filed suit against La Jolla Bank in Las Vegas seeking to avoid a debt noting:  “It’s something happening quite a bit in this environment … Unfortunately, we’re caught in the middle of it.”  http://www.lasvegassun.com/news/2010/jan/22/tarkanian-family-sues-bank-avoid-propertys- foreclo/ 15

RISKS OF LENDER LIABILITY  Delay in recovery  Increased legal fees  More extensive discovery required  Imposition of counterparty legal fees  Recharacterization of debt  Equitable subordination  Cancellation of debt  Compensatory damages (lost profits – speculative)  Reputational damage (fraudulent and predatory lending claims)  Client resources (witnesses; document production; electronic discovery; in-house counsel) 16