VIDEO: Patronage Distributions When the Borrower is in Bankruptcy

In this video, Lisa Sumner, creditors' rights attorney with Nexsen Pruet, talks about how Farm Credit Associations should handle patronage refunds when your borrower is in bankruptcy.

A member’s bankruptcy should have an effect on the member’s right to receive a patronage refund, but the precise effect depends on variables in each case. Let’s examine a few of those variables.

The first question to ask is whether the member who is in bankruptcy is eligible for a patronage refund. Look at what your association’s by-laws and policies say about patronage eligibility. For example, some associations exclude borrowers from patronage eligibility if they have an accelerated loan, a loan in default or non-accrual and past-due at year-end; or if any portion of their debt to the association has been charged-off in the past seven years; or if the member waived patronage rights in consideration for a forbearance or restructure agreement with the association. These types of eligibility rules often apply to a member who is in bankruptcy.

VIDEO: Patronage Distributions When the Borrower is in Bankruptcy

In this video, Lisa Sumner, creditors' rights attorney with Nexsen Pruet, talks about how Farm Credit Associations should handle patronage refunds when your borrower is in bankruptcy.

Photo of VIDEO: Patronage Distributions When the Borrower is in Bankruptcy

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