CITATION OF OUTSIDE SOURCES, I.E. INTERNET, ETC.

Because you are not yet sufficiently familiar with the Harvard Blue Book methodology of citations, you may use APA citation rules for any external sources, as referenced in the Certificate above, that you use.

PROBLEM 5

Assume that you are a Loan Officer at Regions Bank.A well-known businesswoman in town (A) who is the CEO of a well-known and highly respected company in town (B) came to you a year ago and asked for a loan of $1 million to her company to help finance a water reclamation facility on the premises of the company.While the company and the CEO are well-known, another businessman in town (C), who is equally well-respected offered to sign a Guaranty Agreement[1] for the loan to the company.

At the time of this discussion, B (the company) had a number of outstanding loans from other lenders.Naturally, you were concerned about the ability of B to pay those loans because B’s ability to pay those loans could have a direct bearing on the ability of B to pay the $1 million that you and Regions were contemplating loaning it.

Before this transaction, C had been a major shareholder in B.Sometime before the negotiations for the loan from Regions, he sold his shares because he was positioning himself to be able to retire in about 6 months.During the oral negotiations for the loan, C represented to you that B had good relationships with the other banks that were holding the existing indebtedness, that there should be no problems renewing those loans by the other banks, and, therefore, that B was in a position where it could pay the indebtedness to Regions.

You authorized the loan and C signed the Guaranty Agreement.At the time scheduled for payment of the loan, B defaults and C defaults on his Guaranty Agreement.You learn that, at the time that C made the comments about the other loans, A’s and B’s relationships with the banks were deteriorating and that the loans were unlikely to be renewed.

Your CEO comes to you for initial advice before going to Region’s General Counsel.She asks for your opinion about whether Regions has a viable cause of action against C, the Guarantor.Provide your analysis that will serve as the basis of your advice to her. Clearly identify and state the relevant facts, the issue(s), the legal rules that you deem applicable, and do your analysis.

Do you have sufficient facts to make the analysis that you need?If you believe that you do not, then state the additional facts that you would need to make an informed analysis and explain how those additional facts would be relevant to the issue(s) and rule(s) that you have identified.

You do not need to write a memorandum.Just give me your structured analysis.

[1] Regarding Guaranty Agreements, I suggest that you go to the Internet to generally familiarize yourself with them.Your Text does not have sufficient information.