Stark & Stark Shareholders Craig S. Hilliard and Gene Markin Secure Appellate Victory in Loan Financing Litigation

Stark & Stark is pleased to announce that Shareholders Craig S. Hilliard and Gene Markin successfully won an appeal in a significant loan financing case involving the international real estate company Quimera Holding Group and lender Kennedy Funding Financial. This victory is particularly important for businesses, lenders, and borrowers navigating complex loan agreements and collateral disputes.

In this case, Quimera sought loan financing from Kennedy Funding for a real estate project. The loan agreement outlined that the lender would provide funding equal to 55% of the appraised value of certain real estate collateral located in Peru, which was to be identified in an exhibit to the agreement. The referenced list of collateral exhibits, however, was left blank, leading to a later disagreement between the parties regarding which assets should be used to determine the loan’s value.

The dispute escalated when the lender offered to provide a loan that Quimera contended violated the agreement, leading to a lawsuit for the return of millions of dollars in commitment fees paid to Kennedy Funding.

Stark & Stark was retained by Kennedy Funding after the company lost on a summary judgment motion in the district court. Representing Kennedy Funding on the appeal, Craig S. Hilliard and Gene Markin argued that the district court had erred by requiring the lender to offer a loan based on collateral selected by the borrower, instead of the collateral identified by the lender’s valuation. Craig and Gene successfully convinced the appellate court to reverse the lower court’s decision.

Their argument emphasized that Kennedy Funding had fully complied with its contractual obligations, and while the loan was never finalized, the original contract—which required payment of fees to the lender for work completed on the collateral appraisal—remained enforceable. The appeals court found there was a question of fact concerning which properties the parties agreed to use as collateral and therefore Kennedy Funding did not have an undisputed obligation to provide a loan based on the borrower’s selected collateral.

The case, argued before the United States Court of Appeals for the Third Circuit in Philadelphia, resulted in a vacated summary judgment and was remanded for further proceedings to resolve the collateral dispute.

This ruling is significant for businesses, lenders, and borrowers alike, highlighting the importance of clear contract terms and the potential implications of collateral disagreements in loan financing agreements.

For more information or to discuss your business’s legal needs regarding loan agreements, please contact Stark & Stark.