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Archive by Month: June 2018

War Story: Bank Shakedown?

By Greg Veal June 14, 2018 Articles

Have you ever battled a lender over priority to contract funds? [Sure you have.] And have you ever taken collateral or collected indemnity without knowing the source of the funds? [Same answer.] But have you ever been sued by a bank for taking collateral or collecting indemnity? When faced with demands for collateral and indemnity, indemnitors may voluntarily grant the surety a security interest in properties previously conveyed to family or controlled entities without consideration. Indemnitors may even post cash collateral or make payments against their liability under the GAI. A disappointed lender, learning of those transactions, could then sue the surety—it has happened.

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