May 14, 2020

Guaranty

Guaranty

The Bank Guaranty Agreement: The Emerging Threat of the Bankruptcy Stay
      David R. Kuney, 41(1): 77–82 (Nov. 1985)
The bank guaranty agreement has earned its rightful place as an important component of the commercial loan transaction. The guaranty agreement has proven useful in cases of the borrower's bankruptcy because the courts have held that the guarantor is not entitled to the automatic stay under section 362 of the Bankruptcy Code. Recent decisions, however, suggest this may now be changing and that a guarantor of a bankrupt borrower may be able to obtain relief similar to the automatic stay of section 362.

NAIC Model Act on Financial Guaranty Insurance: A Commentary
      Subcommittee on Financial Guarantee Instrumentation of the committee on Developments in Business Financing, 43(2): 717–36 (Feb. 1988)
In December 1986, the National Association of Insurance Commissioners adopted model legislation setting forth a comprehensive scheme for regulating financial guaranty insurance. If enacted into law by the various states, this legislation will have far-reaching effects on both the financial guaranty insurance industry and the financial community. This Report provides a detailed discussion and analysis of the model legislation's provisions.

Waiving Subrogation Rights and Conjuring Up Demons in Response to Deprizio
      Peter L. Borowitz, 45(4): 2151–68 (Aug. 1990)
In response to the insider guaranty preference risk involved in the Deprizio controversy, many commentators have proposed that lenders require any insider guarantor to waive its subrogation rights against the primary obligor. This Article argues that any such technical device will only exacerbate the substantive problem and create a fraudulent conveyance risk for the lender. The Article also discusses how an overly literal reading of the Deprizio decision has led some commentators to exaggerate its impact on secured financings and letter-of-credit transactions.