Case Study
Full Recourse or Carve-Out: The Trailhead Logistics Guaranty Fight
The Deal
Meridian Point Capital, LLC is under contract to acquire Trailhead Logistics Center, a 185,240-square-foot single-tenant industrial distribution building in Sparks, Nevada, for $28,500,000. Cascade Commercial Bank has issued an indicative term sheet for a $18,525,000 acquisition loan (65% LTV) built around a full recourse guaranty from the sponsor's principal, Daniel Osei, with a lower-priced non-recourse carve-out option offered as an alternative. Osei wants the loan on a standard non-recourse carve-out ('bad boy') basis and has asked Meridian Point's deal team to review the term sheet's guaranty and carve-out language, flag anything outside market norms, and recommend how hard — and on what — to push back before the term sheet is countersigned.
You’ll Practice
- Distinguish the liability mechanics of a full recourse guaranty from those of a non-recourse carve-out ('bad boy') guaranty.
- Recognize standard, market-conforming non-recourse carve-out trigger events versus unusually broad lender overreach.
- Quantify the pricing trade-off between accepting full recourse and negotiating a non-recourse carve-out structure.
- Formulate a professional, narrowly targeted negotiating position that concedes market-standard terms while addressing genuine outliers.
- Connect underlying property and lease provisions (e.g., insurance/casualty proceeds handling) to the rationale behind specific guaranty carve-outs.