1. (a) A Lender shall not be authorized to file a Demand for a Collection Guarantee unless it has complied with this section. The requirements contained in this section are in addition to the requirements contained in section 5003.

2. (b) The Lender must liquidate all Collateral, but shall not be required to file a lawsuit against any Borrower or guarantor. “Liquidate” as used in this paragraph means that the Lender has exhausted all Collateral by one of the following methods:

   1. (1) converted the Collateral into cash;
   2. (2) demonstrated, to the satisfaction of the Corporation that the Collateral is without sufficient value to convert to cash; or
   3. (3) demonstrated that the Borrower has filed for bankruptcy.

Note: Authority cited: Section 14022(b), Corporations Code. Reference: Section 14064, Corporations Code.

History

1. Editorial correction filed 2-16-83 (Register 83, No. 8).

2. Repealer and new section filed 6-24-91; operative 7-24-91 (Register 91, No. 42).