Ag Lending: Top 10 Lender Mistakes Snell & Wilmer

Transcription

1 Ag Lending: Top 10 Lender Mistakes 1

2 Snell & Wilmer Overview Full-service business law firm, representing corporations, small businesses, and individuals Founded in 1938 in Phoenix, Arizona More than 400 attorneys Nine locations throughout the western United States and Mexico Denver, Colorado Phoenix, Arizona Tucson, Arizona Los Angeles, California Orange County, California Los Cabos, Mexico Las Vegas, Nevada Reno, Nevada Salt Lake City, Utah 2

3 Office Locations Phoenix Tucson Los Angeles Orange County Denver Los Cabos Las Vegas Salt Lake City 3

4 John O Brien, Partner at Snell & Wilmer John O'Brien practices in banking, agrifinance, commercial finance, commercial law, lender liability defense, agriculture law, agricultural transactions, receivership, creditors rights, and bankruptcy. He has a national agrifinance practice and has closed over $1,000,000,000 of financings on livestock production facilities (including cattle, dairy, hogs, buffalo, poultry and sheep), public elevators, public warehouses, irrigated farms, dryland farms, ranches and other commercial enterprises. John represents national and regional financial institutions and issuers of domestic and international letters of credit securing commodity sales and transactions. He has visited more than 100 livestock production facilities in Texas, Oklahoma, Kansas, Nebraska, Colorado, Wyoming, Iowa and New Mexico. John has litigated, mediated or resolved lien priority disputes, commercial disputes and cattle frauds throughout the United States and has been lead counsel for the primary creditor in more than 100 receiverships in Kansas, Nebraska, Wyoming, Colorado, Iowa, Ohio, and Mississippi. He regularly practices under the Packers and Stockyards Act and is a Colorado Super Lawyer in the area of Banking. John is a long-time cattle feeder, and grows wheat and corn on his Colorado farms. In 2015, John received both the Barrister's Best and Peoples Choice Awards for the Best Agricultural Lawyer in Colorado. John is a leader of the firm's commercial finance group. 4

5 AG LENDING: TOP 10 LENDER MISTAKES 10.Failure to obtain and read a UCC search and financing statements concerning the Debtor. 5

6 AG LENDING: TOP 10 LENDER MISTAKES 9. Failure to obtain and read images of senior title insurance exceptions. 6

7 AG LENDING: TOP 10 LENDER MISTAKES 8. Failure to use a Promissory Note Pledge Agreement on loans secured by notes and mortgage receivables. 7

8 AG LENDING: TOP 10 LENDER MISTAKES 7. Failure to recognize and address special collateral where additional methods of perfection may be necessary: a) Real Estate (including rents, issue, and profits). b) Water rights may be mixed collateral (i.e. may be personality if certificated, otherwise probably realty). Therefore file both ways in UCC and real estate records. Also check water and ditch company articles and bylaws for added requirements. c) Motor vehicles. (Compare to floor plan financing which is inventory financing). d) Mechanic s liens. e) Agister s liens. 8

9 AG LENDING: TOP 10 LENDER MISTAKES 7. Failure to recognize and address special collateral where additional methods of perfection may be necessary: f) Government transfer payments (tax refunds, USDA, CRP, and FSA payments) (compliance with the Assignment of Claims Act). g) Airplanes. 14 CFR Pt. 49 (door may be open to classify as inventory to require UCC filing depending upon flyability.) In re Au Central, Inc., 289 B.R. 170 (Bankr. D. Kan 2002). h) Patents and patents pending. (Probably UCC filing) In re Cybernetic Services, Inc., 252 F.3d 1039 (9th Cir. 2001) (but also file with US Patent and Trademark office). i) Insurance policies (Financing Statement usually proper for insurance payments which are collateral proceeds). 9

10 AG LENDING: TOP 10 LENDER MISTAKES 7. Failure to recognize and address special collateral where additional methods of perfection may be necessary: j) Judgments. k) Vessels. l) Railroad rolling stock. m) Trademarks. (Probably UCC filing.) Trimarchi v. Together Dev. Corp., 255 B.R. 606 (D. Mass. 2000). n) Non-commercial tort claims. o) Commercial tort claims. p) Consumer deposit accounts. q) Landlord s liens. 10

11 AG LENDING: TOP 10 LENDER MISTAKES 7. Failure to recognize and address special collateral where additional methods of perfection may be necessary: r) Liens on wages. s) Licenses and permits. t) Registered copyrights (probably U.S. copyright office). In re Peregrine Entertainment, Ltd., 116 B.R. 194 (C.D. Calif. 1990). u) Unregistered copyrights (probably UCC filing). In re Auxiliary Power Co., 2002 WL (9th Cir. Cal.). 11

12 AG LENDING: TOP 10 LENDER MISTAKES 6. Failure to properly securitize liens on Letters of Credit. 12

13 AG LENDING: TOP 10 LENDER MISTAKES 5. Failure to obtain and exercise rights under the Food Security Act with respect to farm product collateral. 13

14 COMMON PITFALLS AND PERILS: WHAT THE AG LENDER NEEDS TO KNOW Top Lending Traps 4. Failure to confirm Livestock Production Facility licenses and permits. 14

15 COMMON PITFALLS AND PERILS: WHAT THE AG LENDER NEEDS TO KNOW Top Lending Traps 3. Failure to adequately document Cow Lease loans to the lessor or to the lessee: a) Offspring issues. b) Intercreditor agreements. 15

16 COMMON PITFALLS AND PERILS: WHAT THE AG LENDER NEEDS TO KNOW Top Lending Traps 2. Failure to review livestock production facility appraisals and to obtain a lien on all the appraiser s assumptions. Consider facility easements (access, fresh water and effluent) (in and out). 16

17 COMMON PITFALLS AND PERILS: WHAT THE AG LENDER NEEDS TO KNOW Top Lending Traps 1. Western Water, Water, Water. 17

18 Questions 18