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| No. All notes have the availability to be called. As said earlier, it would depend on what was in the loan agreement. I don’t know the story because luckily we are not seeing that here. If someone is going through it, they should be getting their figures together and try to get with someone to get a plan. This would not be a time to play ostrich and put their head in the sand, ignoring what is going on and just hoping it gets better on its own
In the past, 9 out of 10 times the demand feature would kick in because of a delinquent operating note. Once delinquent and if lender s not willing to work with the borrower, the borrower remains delinquent, does not really have an operating plan, and now all notes are being accelerated.
Example would be a corn/soy farmer having a real estate note, and equipment note, and an operating note for crops or a revolving line of credit for crop inputs. Grain for production cycle is all harvested and sold and not enough funds to pay off operating note. Bank does not rework balance (doesn’t renew if it is a line or credit). Now that balance is due and delinquent. Cross default clause kicks in. Lender starts asking how the farmer is going to put crops in. Next question would be is the farmer going to be putting crops in? Hard to have a plan based on grain sales when a crop is not being planted. This is a bad situation and can happen really fast if you are living it. Happened a lot in the 80s.
I think it is what John Mellencamp meant in the song Rain on the Scarecrow: “Crops we grew last summer were not enough to pay the loans. Couldn’t buy the seed to plant this spring and the farmer’s bank foreclosed”.
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Calling bank loans
