RICK L. KNUTH

RLK

RICK L. KNUTH is the keeper of the Banking and Finance Law Spotlight Site.

Rick's practice focuses on assisting institutional and private lenders and borrowers in asset-based loan transactions, real estate financing, accounts receivable and inventory-based financing. He has over 30 years experience in loan documentation, mortgage and trust deed foreclosures, loan participations, credit opinion letters, workouts, and insolvency proceedings of all kinds. He counsels banks large and small in all aspects of their commercial credit relationships.

Look for postings by the other attorneys in our Commercial Lending and Banking Practice Group.

Keven M. Rowe (Group Leader)
Tom Berggren
Rick L. Knuth
Kyle V. Leishman
James W. Peters
Susan B. Peterson
Jacob Redd
George R. Sutton
Glen D. Watkins
Randon W. Wilson

Published Articles

"Fraudulent Checks- the 'Same Wrongdoer' Defense"
by Rick L. Knuth

Originally Published in Utah Banker Magazine Fall 2013.

Important Resources
DEBTS MAY BE NON-DISCHARGEABLE WHEN THE BORROWER MISREPRESENTS THE INTENDED USE OF LOAN PROCEEDS
Posted on Jun. 4, 2013

Section 523(a)(2)(A) of the Bankruptcy Code provides that a debtor may not receive a discharge for debts found to be incurred by fraud.  It is well-settled that if a debtor borrowed money intending not to repay it, the debt is non-dischargeable.  But what happens when the debtor-borrower misrepresents the purpose of the loan?  That is, when the borrower tells the lender he needs the loan for x, but all the time he really intended to spend on y?

The Bankruptcy Court for the District of Virginia recently answered this interesting question in Johnson v. Dowling, 2013 WL 684681.  That decision held that where the debtor deliberately fails to use the loan proceeds for the purpose represented to the lender, the debt is non-dischargeable, even where the debtor always intended to repay the loan.

Note, however, that the lender must still prove – by the “clear and convincing” evidence standard required in fraud actions – that the debtor intended to use the proceeds for something other than what was represented to the debtor, at the time the loan was made.  Although the creditor must still prove the common law elements of fraud, the Dowling case can provide another mechanism for non-dischargeability where the facts warrant.

 

This post was written by attorney Rick L. Knuth

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PROFESSIONAL AFFILIATIONS

ACMA

Rick Knuth is a member of the American College of Mortgage Attorneys.

George Sutton was recognized in 2012 as Utah Attorney of the Year in Financial Services Regulation Law by Best Lawyers in America.

Rick Knuth was recognized in 2012 as Utah Attorney of the Year in Banking and FinanceLaw by Best Lawyers in America.

All eligible attorneys in this group are ranked AV Preeminent by Martindale-Hubbell.

community and industry outreach

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Utah Association of Financial Services

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Utah Banker's Association

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