Experience With Lender Liability Claims

Spangenberg and the Business Practice Group have a history of working with companies—whether those companies remain going concerns or are in bankruptcy or receivership—in exploring claims against banks and other lenders for wrongful acts taken by the lender that damaged the business.

Generally, lender liability arises from allegations that a lender has violated the duty of good faith, contractual or implied, and the fair dealing that was owed to the borrower. Lender liability may also arise from allegations that a lender has assumed a degree of control over the borrower, resulting in the creation of a fiduciary duty owed to the borrower, its creditors or its shareholders.

Some common occurrences that can lead to liability for a lender include the lender:

  • Wrongfully refusing to honor a loan commitment
  • Wrongfully refusing to renew a loan, improperly foreclosing a deed of trust or a mortgage or a security agreement without giving the required notice or otherwise following proper statutory procedures
  • Interfering, to the borrower’s detriment, with a borrower’s day-to-day management or the borrower’s contractual relations with third parties
  • Breaching a fiduciary duty that may have arisen or that a lender may have assumed with respect to a borrower in carrying out the terms of the parties’ loan contract