Blue Wolf Capital Fund II, L.P., Appellant, v American Stevedoring, Inc., Respondent, and General Electric Capital Corporation et al., Nominal Defendants., 105 A.D.3d 178

Summary

The borrower, in need of immediate financing to meet its current liabilities, negotiated with the lender for funds to keep it afloat. Thereafter, the parties executed a loan agreement, pursuant to which the lender could demand payment at any time. The lender also withheld a $200,000 deposit against future commitment fees. When the lender decided not to buy an equity interest in the borrower, it sent the borrower a letter demanding immediate payment of the loan. The lender further informed the borrower that it would only return half of the deposit. The appellate court found, inter alia, that the loan transaction was void because it was criminally usurious as a matter of law, and the collateral agreement was unenforceable. The $200,000 deposit constituted additional interest. The fate of the deposited funds was contingent on events that were entirely within the lender's control. Finally, the effective rate of interest for the demand loan, 36.09%, exceeded the legal rate. Accordingly, the...