What is the name of your state (only U.S. law)? NY. Hoping this is the right forum.
We have several open lines of credit for our business with little to no security other than our financials. We have been doing business with this bank for many years with no issues and also never missed or have been late on a single payment. Recently, a local similar business went belly up and left a few of the local banks hanging with a bunch of open ended debt. (Not this bank that I am aware of but its a small town everyone talks). Once this happened our bank did an audit of our account and found they were not satisfied with the terms of the security and demanded the notes be due and payable immediately. There by putting us in default giving them all the rights and us none.
I know in Mortgage banking we would have had to do something like miss a payment or have a big change in our financials for them to make this move which we have had neither happen. Again, in Mortgage law they can not simple call a note due with out cause. I have searched the commercial banking sights but can not find how something like this treated under those laws.
My question. Can they call them due and payable immediately thereby "creating" a default if nothing on our end changed?
We have several open lines of credit for our business with little to no security other than our financials. We have been doing business with this bank for many years with no issues and also never missed or have been late on a single payment. Recently, a local similar business went belly up and left a few of the local banks hanging with a bunch of open ended debt. (Not this bank that I am aware of but its a small town everyone talks). Once this happened our bank did an audit of our account and found they were not satisfied with the terms of the security and demanded the notes be due and payable immediately. There by putting us in default giving them all the rights and us none.
I know in Mortgage banking we would have had to do something like miss a payment or have a big change in our financials for them to make this move which we have had neither happen. Again, in Mortgage law they can not simple call a note due with out cause. I have searched the commercial banking sights but can not find how something like this treated under those laws.
My question. Can they call them due and payable immediately thereby "creating" a default if nothing on our end changed?
