Lenders Beware: Make Sure Your Borrower’s Organizational Documents’ Blocking Director Provisions Comply With State Law
The Creditors Rights
JUNE 7, 2016
Many lenders attempt to render their borrower bankruptcy remote by requiring the borrower to have on its board a director, known as a “blocking director,” whose consent is required for any bankruptcy filing. However, in doing so, the lender needs to make sure the organizational documents which impose this condition on the buyer comply with requirements of the law of the state in which the borrower is organized.
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