A key takeaway that I got from the Brainshark Mezzanine loans enables the borrower to receive loans many times more than traditional loans. It helps in the initial phase of the project to cover high costs, such as acquiring land for future development and preparation of general construction works. Construction work includes the procurement of materials, the compensation payment to workers and builders, or the construction project’s total financing. Mezzanine loans are secured against real estate and are repaid according to the debt hierarchy. Sometimes, when issuing such a loan, the lender requires additional personal and property guarantees from the borrower to provide proof of repayment. The repayment of a mezzanine loan begins with the “older” debt and then proceeds according to the time hierarchy. Priority is usually governed by an “inter-creditor deed” agreement, which denotes succession in the event of bankruptcy or liquidation of the company. Also, in the event of a default by the borrower, the mezzanine lender assumes ownership of the borrower.
Mezzanine lenders are required to make ancillary endeavors to ensure that UCC implementations are not readily attacked. They need to engage in intense promotional efforts by providing adequate warning to the borrower and likely bidders and considering resale to interest multitude purchasers and give them a legitimate chance to conduct comprehensive due diligence. All this follows to consider something suitable in a simple time can be unreasonable during a pandemic. Additionally, lenders have every chance to clarify the loan agreement’s wording, which could be interpreted since not providing the borrower with compensation for foreign exchange damage (Dremluk). Explaining that all kinds of limitations of legal remedies are not obliged to apply to the borrower’s complaints that the lender performed no resale in the following way or to use any means of legal defense by the applicable law.
Work Cited
Dremluk, Robert. “UCC Mezzanine Loan Collateral Sales: Commercial Reasonableness During COVID.” New Your Law Journal, 2020, Web.