Aftershocks Coming? Anticipating Borrower Defaults and Defenses When Stimulus Ends

By Eric W. Anderson and Bryan E. Bates


When the world turned upside-down a year ago, many predicted that the severity of the damage to the U.S. economy would usher in a period of borrower defaults, business failures and bank foreclosures. Rapid government intervention, including bank regulatory easing, has prevented that series of events, for now. Those policy measures will surely come to an end before long, at which point lender enforcement activity will likely increase.

Due to the severity and novelty of the pandemic’s effects on many businesses, lenders can expect that borrowers will assert myriad defenses to their defaults, claiming that their failures should be blamed on the unprecedented public health crisis. This article will examine both the current regulatory posture that is helping calm the waters and early court interpretation of several defenses raised by borrowers so far in the pandemic. 

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About the Author

Eric Anderson is a partner in the bankruptcy practice group of Parker, Hudson, Rainer & Dobbs LLP in Atlanta. His practice focuses on bankruptcy, workouts, financial restructuring and commercial finance, representing lenders and other parties in bankruptcy and financial restructuring matters in and out of bankruptcy, debtorin- possession financing, purchase and sale of assets of distressed companies, and various related transactions. Eric is a frequent speaker and lecturer on bankruptcy and related topics, and a frequent author for the ABI Journal and other publications. Eric is a member of the Board of Directors of the American Bankruptcy Institute and the Southeastern Bankruptcy Law Institute and is a Fellow in the American College of Bankruptcy. He can be reached at

Bryan Bates is also a partner in the bankruptcy practice group of Parker, Hudson, Rainer & Dobbs LLP in Atlanta. His practice focuses on business bankruptcy, creditors’
rights, and commercial litigation. He represents secured and unsecured creditors, debtors, committees, trustees and other parties-in-interest in Chapter 11 reorganization proceedings, insolvency matters, and debtor/creditor litigation, both in and out of Court. Bryan also represents parties in business disputes and commercial litigation matters in state and federal courts. He is a member of the Turnaround Management Association, the Bankruptcy Section of the Atlanta Bar and the American Bankruptcy Institute. He can be reached at