Back in the 1990’s, the Standard Chartered Bank out of the UK opened a subsidiary in Canada called the Standard Charted Bank of Canada and set about making commercial loans.
One of the Bank’s customers was a client of mine who I will call Sol. Sol had a line of credit for his business of about $3,000,000, back when $3,000,000 was a lot of money.
When the recession of the mid 90’s happened, Sol was in the fortunate position of having a great relationship with his bank. Or so he thought.
One day Sol got a letter from the Bank. The general thrust of the letter was along the lines of “We have decided to terminate our operations in Canada. We would like all of our money back in thirty days. Have a good day.”
Now it so happens that Sol was probably the best customer of Standard Chartered Bank of Canada. He had made all payments when due, scrupulously complied with all of his covenants and generally speaking had been easy to deal with.
So Sol spoke to the Bank and explained that there was a recession happening and it would be exceedingly difficult to get refinanced within 30 days. The Bank’s response was something along the lines of, “too bad, so sad, we will turn our lawyers loose on you if you do not pay up.”
And so I was given the opportunity to exchange some prose with the Bank’s lawyer. The correspondence was along the following lines:
Bank lawyer: Your client needs to pay within 30 days or all hell will break lose.
Murray: We need more time.
Bank lawyer: Too bad. We have given your client 30 days to pay a demand loan. There has never been a case in Canada allowing the debtor more than 30 days to pay. I am a big law bank lawyer who is a specialist in banking and insolvency. You, Murray, are not. Do some research.
Murray: You are right that I am just a suburban corporate lawyer. But I am willing to bet you that there has never been a case in Canada where a foreign Bank decided to take its ball and gone home during a deep recession and, in the process, tried to destroy the business of a client who was in full compliance with the terms of its loan, putting a bunch of employees out of work in the process. It seems to my unsophisticated mind that if ever there was going to be a case where the courts were going to allow more than 30 days to repay a demand loan, this is it. Let’s go make some law!
Bank lawyer: How much more time do you need?
Murray: As much time as it takes to get refinanced. We will keep you posted on how we are doing.
Bank lawyer: Sounds good.
Lessons for young lawyers:
- Context is everything.
- Big law bank lawyer knew that he did not want to be litigating this case before I told him that. He was just trying me on for size. Hone your bullshit meter.
- If you are a sole practitioner or with a small firm or are new to the profession, expect this treatment from other lawyers. Do your homework. Consult with more experienced counsel if necessary.