On September 28, 2023, Justice Chan of the New York County Commercial Division issued a decision in White Oak Commercial Fin., LLC v. EIA Inc., 2023 NY Slip Op. 33362(U), holding that a secured creditor may enjoin a guarantor’s assets, explaining:
Here, the Orents fail to establish that the court misapprehended any controlling law or facts when it determined that White Oak had established irreparable harm as a secured creditor. To start, as the Orents plainly recognize, White Oak is a secured creditor with respect to the $10 million revolving line of credit under the Credit Agreement, which was secured by the Collateral and personally guaranteed by the Individual Guarantors (including Matthew). This is the secured debt that White Oak is suing to recover from defendants, including Matthew as guarantor of that debt. And this the secured debt that White Oak is attempting to protect from further dissipation based on the conduct of, as is relevant here, Matthew and AnDreea. For these reasons, the court’s conclusion that White Oak established irreparable harm-and, more broadly, entitlement to injunctive relief-based on its status as a secured creditor, as well as its showing that certain guarantors’ conduct threatened to render ineffectual any potential judgment, is entirely consistent with Court of Appeal’s directives in Credit Agricole Indosuez v Rossiyskiy Kredit Bank.
The cases upon which the Orents rely do not compel a different conclusion. Knaak v Wells Fargo Bank, N.A., for example, merely recognized that a liability arising solely from a guaranty executed in connection with secured loan agreement is an unsecured debt. Meanwhile, both PNC Bank N.A. v Sprout Mortg., LLC and Aprile v Men of Invention LLC involved unsecured creditors, and neither decision offers any indication that plaintiffs’ lawsuits and corresponding motions for injunctive relief were premised on concerns over the dissipation of a secured debt. Finally, in Silva v Silva, the court determined that plaintiff was an unsecured creditor because she had failed to perfect her security interest and was content on remaining an unsecured creditor.
None of these decisions hold, as the Orents seemingly suggest, that a creditor suing to collect on a secured debt cannot establish entitlement to injunctive relief when it alleges actions taken by a guarantor that may frustrate its collection efforts. Nor do the Orents cite to any authority to support their apparent position that, even after recognizing that a creditor is a secured creditor as to the specific indebtedness upon which it has sued, the court must still analyze the specific nature of each and every guarantee of the secured debt to determine whether those guarantees are also secured or unsecured.
(Internal citations omitted).