Dianna Lee

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Between 2008 and 2011, Georgia experienced seventy-four bank failures, the highest number of failures in the nation. Of these seventy-four banks, sixty-nine were small banks (banks with less than $1 billion in assets), five were "medium-size" banks (banks with assets between $1 billion and $10 billion), and none were large banks (banks with more than $10 billion in assets). The majority of bank failures in Georgia were therefore comprised of small banks with less than $1 billion in assets. Unfortunately, the failures of these community banks "were largely driven by credit losses on commercial real estate ... loans." ...

Part I of this Comment will provide a general overview of Georgia's confirmation statute and its application to guarantors. Part I further advocates that such an application with respect to commercial guarantors is inconsistent with the purpose of the statute, which has remained relatively unchanged from its original enactment in 1935. Part II will discuss the decision of the Georgia Court of Appeals in HWA Properties, which upheld the enforceability of the guaranty agreement despite the bank's failure to comply with the terms of the confirmation statute. Part III proposes that the Georgia legislature codify the court's decision in HWA Properties and explicitly include a provision in the confirmation statute allowing guarantors to waive protection of the statute. In the alternative, the legislature could substantially amend the confirmation statute to replace confirmation proceedings with a "true market value defense" available for debtors-both principal borrowers and guarantors- to assert in a deficiency action.