#2174499 - 04/20/18 05:31 PM
Re: SCRA & Commercial Loans?
Anonymous
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Diamond Poster
Joined: Oct 2015
Posts: 1,668
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@Dan, I tried to go to the link above, but it no longer seems to go to a specific case. It goes to a place with a laundry list of cases, and I am not going to read through all of them. Bottom line, it sounds like in transaction specific scenarios, the Bank should consult legal counsel. I know there was a recent ruling, Davis vs. City of Philadelphia, where the court ruled that an obligation in the name of a corporation that the servicemember owned was not eligible for SCRA protections.
In cases where other parties are involved in the corporation, it sounds like the above thread is saying SCRA protections apply. The "obligation and liability" definition is very vague. Would it apply to a loan to a business where the SCRA member is only a guarantor? I would see that a guarantor could be "liable" on the obligation, making it sound like SCRA protections may be available. Again, for such situations, is it just best to be left for legal interpretation?
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#2174589 - 04/23/18 02:48 PM
Re: SCRA & Commercial Loans?
Anonymous
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10K Club
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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The link to the case is no longer valid but here is a summary. Cathey v. BancorpSouth Bank Case URL: https://www.bankersonline.com/lending/catheycase.htmlFederal district court granted summary judgment on the Section 526 SSCRA claims to the plaintiffs. A bank acquired by BancorpSouth had made a loan to Cathey's corporation. Cathey and his wife were listed as co-borrowers and also as guarantors and their personal house was one of the pieces of collateral. When Cathey was called up on active duty as a reservist, the bank declined to reduce the interest rate to 6%. Disastrous consequences ensued. Ultimately, the Catheys sued and the court granted summary judgment. UPDATE: This case was scheduled to go to jury trial on the issue of damages beginning May 6, 2002. Instead, the case was settled. Read the Press Release announcing the settlement. where the court ruled that an obligation in the name of a corporation that the servicemember owned was not eligible for SCRA protections.I have not read the case but if the servicemember is not directly or indirectly obligated on the debt to the corporation then the corporation would have no protection under the SCRA.
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The opinions expressed are mine and they are not to be taken as legal advice.
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