Recently, the U.S. Court of Auditors for circuit of Six in Bash v. Textron Financial Corporation (In re Fair Finance Company)1 overturned a decision of the District Court for the Northern District of Ohio that an amended and revised loan agreement was not an innovation in the original loan agreement. Thus, in the generalized cancellation of the rejection of a proceeding in question resulting from Chapter 7 bankruptcy proceedings, the Landgericht found that the amended and amended loan agreement was in fact a reissue of the original loan contract (or at least is not clear). If the amended and revised loan agreement were indeed a new one, the security interest granted on the basis of the original loan agreement would have been terminated on the date the parties entered into the amended and amended loan agreement2. If a lawyer wishes to amend the terms of an agreement and the amendments are significant and involve many provisions of the agreement, counsel will often develop an amended and revised agreement to make these changes. A single modified and revised agreement is often easier to read than the original agreement and a separate amendment (or a number of separate amendments). For financing transactions, parties often use modified and revised credit contracts. When doing so for secured financing, the parties almost always intend that the property that secured the original credit contract will continue to cover the obligations arising from the amended and amended credit contract, and as shown in a new case, it is important that the parties ensure that the document makes it clear that this is not a renewal of the obligations under the original credit contract. In the In Re Fair Finance Company, the amended and amended loan agreement (the “2004 agreement”) explicitly provided that the obligations under that agreement would be secured by a security interest for the same guarantees that guaranteed the original credit contract (“the 200 2) and that the 2004 agreement “wanted the parties to amend and reaffirm the 2002 agreement” The District Court found that the following provisions of the 2004 agreement support the conclusion that the parties to the 2004 agreement are a renewal of the 2002 agreement: in general law, the essential elements of innovation are: (1) a valid previous obligation; (2) an agreement between the parties to a new contract; (3) the removal of previous commitments; and (4) a new valid contract. To satisfy the second and third elements, all parties must have “clearly expressed their intention to replace or replace an old agreement.” 3 The key to innovation analysis is therefore the intention of the parties. While the inadequacy of the evidence proposed by the District Court suggests that the parties might have wanted to innovate may be questioned, the lesson that counsel developing a modified and revised funding agreement should learn from this decision is the importance of clearly explaining the parties` intention that the amended and revised agreement is not an innovation.
The In re Fair Finance Company court stated that the 2004 agreement did not explicitly provide for the parties to consider maintaining the original security interests.9 In the development of an amended and revised financing agreement, counsel should include an explicit statement that the agreement is not intended to be an innovation or an end to the commitments arising from the original agreement. , and as part of guaranteed financing, that security interests established in accordance with the original agreement must be pursued and insured with obligations arising from the revised and revised agreement.