United States Bankruptcy Court, S.D. New York. June 11, 1992. We hold the alleged loan participation agreement is in fact a disguised loan, and relief from stay will be denied. This Memorandum of Decision constitutes findings of fact and conclusions of law under Federal Rule of Civil Procedure Rule 52, as made applicable by Federal Rules of Bankruptcy Procedure Rules 7052 and 9014. An involuntary Chapter 11 petition was filed against it on November 6, 1990.
Trustee objects on the grounds that the loan participation is a disguised loan.
The Assignment of Mortgage was recorded. JIB paid Coronet in full for JIB's interests in the Assignment Agreement. A typical loan participation transaction involves a lead lender who retains some interest in the transaction, retains possession of the note, and retains the power to enforce against the mortgagor. The relationship between a lead lender and a participant is characterized as debtor and creditor if the participation is in fact a loan. Those purchasers of mortgages are able to obtain the mortgages or interests in mortgages that they have purchased from a debtor without a trustee asserting that the sale of the mortgage is a loan from the purchaser to the debtor.