§ 2005. — Payment of losses on guaranteed loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC2005]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER IV--ADMINISTRATIVE PROVISIONS
Sec. 2005. Payment of losses on guaranteed loans
(a) Payments to lenders
(1) Requirement
Within 3 months after a court of competent jurisdiction confirms
a plan of reorganization under chapter 12 of title 11, for any
borrower to whom a lender has made a loan guaranteed under this
chapter, the Secretary shall pay the lender an amount estimated by
the Secretary to be equal to the loss incurred by the lender for
purposes of the guarantee.
(2) Payment toward loan guarantee
Any amount paid to a lender under this subsection with respect
to a loan guaranteed under this chapter shall be treated as payment
towards satisfaction of the loan guarantee.
(b) Administration
(1) Loss by lender
If the lender of a guaranteed farmer program loan takes any
action described in section 1981(b)(4) of this title with respect to
the loan and the Secretary approves such action, then, for purposes
of the guarantee, the lender shall be treated as having sustained a
loss equal to the amount by which--
(A) the outstanding balance of the loan immediately before
such action, exceeds
(B) the outstanding balance of the loan immediately after
such action.
(2) Net present value of loan
The Secretary shall approve the taking of an action described in
section 1981(b)(4) of this title by the lender of a guaranteed
farmer program loan with respect to the loan if such action reduces
the net present value of the loan to an amount equal to not less
than the greater of--
(A) the greatest net present value of a loan the borrower
could reasonably be expected to repay; and
(B) the greatest amount that the lender of the loan could
reasonably expect to recover from the borrower through
bankruptcy, or liquidation of the property securing the loan,
less all reasonable and necessary costs and expenses that the
lender of the loan could reasonably expect to incur to preserve
or dispose of such property (including all associated legal and
property management costs) in the course of such a bankruptcy or
liquidation.
(3) Construction of subsection
This subsection shall not be construed to limit the authority of
the Secretary to enter into a shared appreciation arrangement with a
borrower, or the terms and conditions which shall be required of a
borrower, under section 2001(e) of this title.
(Pub. L. 87-128, title III, Sec. 357, as added Pub. L. 100-233, title
VI, Sec. 619, Jan. 6, 1988, 101 Stat. 1683; amended Pub. L. 101-624,
title XXIII, Sec. 2388(d)(2), Nov. 28, 1990, 104 Stat. 4053.)
References in Text
For definition of ``this chapter'', referred to in subsec. (a), see
note set out under section 1921 of this title.
Amendments
1990--Subsec. (b)(1), (2). Pub. L. 101-624 substituted
``1981(b)(4)'' for ``1981(d)''.
Section Referred to in Other Sections
This section is referred to in section 1991 of this title.
