§ 1480 Bank Loan Obligations Definition

This law defines what counts as a debt or payment duty that a bank can consider when figuring out who owes money, including debts of businesses, partners, and related groups.

Key Takeaways

•A person's debts can include debts of a business they own or are connected to.
•Debts of a partnership are treated as debts of each partner who is responsible.
•Debts of a corporation can include debts of its majority‑owned subsidiaries, unless the regulator says otherwise.
•The same rule applies to limited liability companies and their majority‑owned subsidiaries.
•The regulator can set special limits when a bank asks for them before the debt is created.

Example

A small business owner borrows money from a bank, and the bank later tries to collect from the owner’s personal assets if the business can’t repay.

Because the owner’s personal debts include the business’s debts, the bank can treat the owner’s personal money as part of the obligation.

For the purpose of this article: (a) “Obligations” means the total sums for the payment of which a person is obligated, primarily or secondarily, to a commercial bank. (b) Obligations of a person include obligations of others to a commercial bank arising out of loans made by the bank for the benefit of the person. (c) Obligations of an individual include the obligations of a partnership or association for which obligations the individual is liable. (d) Obligations of a partnership include the obligations of its members who are liable for its obligations. (e) Obligations of a corporation include the obligations of all subsidiaries in which it owns or controls a majority interest, except to the extent and under such restrictions as the commissioner may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. (f) Obligations of a sovereign government or agency include the obligations of instrumentalities or political subdivisions of the government or agency, except to the extent and under such restrictions as the commissioner may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. (g) Obligations of a limited liability company include the obligations of all subsidiaries in which it owns or controls a majority interest, except to the extent and under any restrictions the commissioner may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

This law defines what counts as a debt or payment duty that a bank can consider when figuring out who owes money, including debts of businesses, partners, and related groups.

Key Takeaways

•A person's debts can include debts of a business they own or are connected to.
•Debts of a partnership are treated as debts of each partner who is responsible.
•Debts of a corporation can include debts of its majority‑owned subsidiaries, unless the regulator says otherwise.
•The same rule applies to limited liability companies and their majority‑owned subsidiaries.
•The regulator can set special limits when a bank asks for them before the debt is created.

Example

A small business owner borrows money from a bank, and the bank later tries to collect from the owner’s personal assets if the business can’t repay.

Because the owner’s personal debts include the business’s debts, the bank can treat the owner’s personal money as part of the obligation.

Key Takeaways

Example

Key Terms

References

§ 1480 Bank Loan Obligations Definition

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References