On December 10, 2024, Justice Bannon of the New York County Commercial Division issued a decision in TPCAF I, LLC v. Aboutaam, 2024 NY Slip Op. 34420(U), holding that a lender is not required to foreclose on collateral rather than sue for the amount due on the loan, explaining:
In opposition, the defendant does not dispute the plaintiff’s factual allegations, o r the amount sought by the plaintiff. Indeed, in his purported affirmation in opposition, the defendant essentially admits that the Borrower defaulted on the loan, and that it did so due to current market conditions and slow to no business in the art industry. While the court is sympathetic to the defendant’s current unfortunate financial circumstances, the inability to pay is not a defense to this action, particularly as the guaranty contains broad and unconditional language holding the defendant liable for the Borrower’s default under the Loan Agreement. . . .
The defendant also represents that the plaintiff is in possession of collateral, artworks pledged by the Lender to secure the loan, and argues that the plaintiff is wrongly seeking double recovery in moving for summary judgment. The defendant opines that the plaintiff should instead sell the collateral to satisfy the debt. This argument is without merit, as a lender may choose to proceed against a borrower or guarantor on a note and is not obligated to sell the collateral it retains under such a note. In any event, there has been no recovery, much less double recovery.
(Internal quotations and citations omitted).