In re Coronet Capital Co.

25 Citing cases

  1. In re Sackman Mortgage Corp.

    158 B.R. 926 (Bankr. S.D.N.Y. 1993)   Cited 33 times
    Applying Coronet factors

    See also, Woodson, 813 F.2d at 266 (participation agreement or loan); In re Pacific Express, Inc., 780 F.2d 1482 (9th Cir. 1986) (lease or secured transaction); In re Best Products Co., Inc., 157 B.R. 222 (Bankr. S.D.N.Y. 1993) (purported lease with related corporation not a true lease but part and parcel of secured loan from third party); In re Coronet Capital Co., 142 B.R. 78 (Bankr.S.D.N.Y. 1992) (loan and not participation agreement); In re Cobham Enterprises, Inc., 62 B.R. 191 (Bankr.S.D.N Y 1986), aff'd, 72 B.R. 779 (S.D.N.Y. 1987) (lease or security); In re S. O.A. W. Enterprises, Inc., 32 B.R. 279, (Bankr.W.D.Tx. 1983) (participation agreement or loan). Although the agreement itself is entitled "Construction Loan Participation Agreement," and § 3 states that "[t]he interest of [EAB] is that of an owner of a senior interest in the Loan and all security therefor, and [EAB] has not made a loan hereunder to [SMC]," these provisions conflict with the guts of the agreement, as discussed in detail below.

  2. In re Brooke Capital Corp.

    CASE NO. 08-22786-7, ADV. NO. 08-6132 (Bankr. D. Kan. Jan. 20, 2011)

    loans; participation agreements held to be true participations); Fireman's Fund Ins. Cos. v. Grover (In re The Woodson Co.), 813 F.2d 266, 270-72 (9th Cir. 1987) (bankruptcy trustee succeeded on claim "participations" were disguised loans to debtor rather than sales of interests in underlying loans, so all lender interests in underlying loans were property of bankruptcy estate); In re Yale Express System, Inc., 245 F.Supp. 790, 791-92 (S.D.N.Y. 1965) (bank that participated in loan to debtor sought to set off money in debtor's account at the bank against loan participation interest; court held participation interest did not make bank a creditor of debtor, so account could not be set off against participation interest); European American Bank v. Sackman Mortgage Corp. (In re Sackman Mortgage Corp.), 158 B.R. 926, 931-35 (Bankr. S.D.N.Y. 1993) (bankrupt debtor-"seller" defeated "buyer's" request for summary judgment determination that transaction was sale of participation, not a loan); In re Coronet Capital Co., 142 B.R. 78 (Bankr. S.D.N.Y. 1992) (bankruptcy trustee successfully argued participation was loan, not sale, so all lender interests in underlying loan were property of bankruptcy estate); cf. First Bank of Wakeeney v. Peoples State Bank, 12 Kan.App.2d 788 (1988) (suit between parties to participation agreements; no recharacterization sought). The Court has reviewed one other case which involved a bankruptcy trustee's effort to have a debtor's transaction recharacterized as a loan.

  3. Rothenberg v. Oak Rock Fin., LLC

    14-cv-3878 (E.D.N.Y. Mar. 31, 2015)   Cited 3 times

    4) the document is evidence of the parties true intentions.In re Coronet Capital Co., 142 B.R. 78, 82 (Bankr. S.D.N.Y. 1992). However, "the relationship between a lead lender and a participant is characterized as debtor and creditor if the participation is in fact a loan (In re Coronet Capital Co., 142 B.R. at 80) and the following factors indicate that a transaction is not in fact a participation, but rather a disguised loan:

  4. In Re: Autostyle Plastics, Inc.

    269 F.3d 726 (6th Cir. 2001)   Cited 231 times   8 Legal Analyses
    Holding that a loan with an interest rate based on a “prime rate,” although it may fluctuate, was a “fixed rate of interest” for purposes of recharacterization analysis

    In re Hyperion Enters., 158 B.R. 555, 563 (D.R.I. 1993) (in considering equitable subordination claim involving insiders, court noted that "because insiders are the persons more interested in restoring and reviving the debtor, such bona fide efforts should be viewed with approval"). In In re Coronet Capital Co., 142 B.R. 78 (Bankr.S.D.N.Y. 1992), the court devised a four-part definition of a "true" participation agreement: (1) money is advanced by a participant to a lead lender; (2) the participant's right to repayment only arises when the lead lender is paid; (3) only the lead lender can seek legal recourse against the borrower; and (4) the document is evidence of the parties' true intentions. Id. at 82; see also In re Sackman Mortgage Corp., 158 B.R. 926, 933 (Bankr.S.D.N.Y. 1993) (applying Coronet factors); In re Yale Express Sys., Inc., 245 F.Supp. 790, 792 (S.D.N.Y. 1965) (first articulating factors adopted as four-part definition in Coronet).

  5. In re SRS Capital Funds, Inc.

    20-72883-reg (Bankr. E.D.N.Y. Apr. 13, 2022)   Cited 1 times

    Loan participation, Black's Law Dictionary (11th ed. 2019). Courts have articulated four factors (the "Coronet Capital factors") for finding a true loan participation, asking whether: (1) money is advanced by participant to a lead lender; (2) a participant's right to repayment only arises when a lead lender is paid; (3) only the lead lender can seek legal recourse against the borrower; and (4) the document evidences the parties' true intentions. Rothenberg, 2015 WL 10663413, at *7 (citing In re Coronet Capital Co., 142 B.R. 78, 82 (Bankr. S.D.N.Y. 1992)). For purposes of a § 541(d) equitable interest analysis, a loan participation is one in which a lead lender originates a loan and then sells an equitable right to payment from that loan while retaining legal title.

  6. In re Corporate Financing, Inc.

    221 B.R. 671 (Bankr. E.D.N.Y. 1998)   Cited 15 times

    4) the document is evidence of the parties' true intentions. See In re Coronet Capital Co., 142 B.R. 78, 82 (Bankr.S.D.N Y 1992); see also In re Sprint Mortgage Bankers Corp., 164 B.R. at 228. In contrast to these factors, indications that a transaction is a loan include the following:

  7. Pantelopoulos v. Fort Lee Fed. Sav. Bank, FSB

    DOCKET NO. A-2240-11T2 (App. Div. Aug. 20, 2013)

    Courts have defined a "true" participation agreement as one having four attributes: "(1) money is advanced by a participant to a lead lender; (2) the participant's right to repayment only arises when the lead lender is paid; (3) only the lead lender can seek legal recourse against the borrower; and (4) the document is evidence of the parties' true intentions." In re AutoStyle Plastics, Inc., 269 F.3d 726, 736-37 (6th Cir. 2001) (citing In re Coronet Capital Co., 142 B.R. 78, 82 (Bankr. S.D.N.Y. 1992)). A participation agreement offers benefits to both the lead lender and the participant.

  8. Citizens Bank & Trust Co. v. Riederer (In re Brooke Capital Corp.)

    CASE NO. 08-22789-7 (Bankr. D. Kan. Oct. 5, 2012)   Cited 2 times   1 Legal Analyses

    , In re the Woodson Company, 813 F.2d 266, 271-72 (9th Cir. 1987) (fact participation seller relieved alleged buyers of "all risk of loss" was most significant fact leading to finding participations were actually loans to seller). Woodson Company, 813 F.2d at 271; European American Bank v. Sackman Mortgage Corp. (In re Sackman Mortgage Corp.), 158 B.R. 926, 934-35 (Bankr. S.D.N.Y. 1993) (fact participant was to be paid before seller was one factor leading court to deny summary judgment on participant's claim participation could not be treated as loan to seller); In re Coronet Capital, 142 B.R. 78, 80-81 (Bankr. S.D.N.Y. 1992). Sackman Mortgage Corp., 158 B.R. at 934-35; Coronet Capital, 142 B.R. at 81.

  9. In re Churchill Mortg. Inv. Corp.

    233 B.R. 61 (Bankr. S.D.N.Y. 1999)   Cited 14 times
    Finding the sole interest resulting from a loan to the lead is that of a lender to the lead lender

    Id. Another case providing helpful analysis is In re Coronet Capital Company, 142 B.R. 78 (Bankr.S.D.N.Y. 1992) involving a similar issue under Section 541(d) of the Bankruptcy Code and similar facts. Citing Hutchins, What Exactly is a Loan Participation?, 9 Rut.Cam.L.J. 447, 460 (1978), Bankruptcy Judge Conrad identified the following "factors indicating an intention to create a loan instead of a participation" ( 142 B.R. at 80):

  10. In re Autostyle Plastics, Inc.

    216 B.R. 784 (Bankr. W.D. Mich. 1997)   Cited 4 times

    Id. The second case involving participation interests cited by counsel is In re Coronet Capital Co., 142 B.R. 78 (Bankr. S.D.N.Y. 1992). In Coronet, the participant purchased a $500,000 senior participation interest in a secured loan made by the debtor to a third party.