Credit obligations are one of the key financing instruments for businesses, but at the same time they represent a source of heightened legal risk. Professor Gabriel Steiner emphasizes that it is precisely in corporate credit relationships that contractual logic is most often replaced by de facto liability, when the limits of a borrower’s obligations begin to expand beyond the agreed terms. At LawConsulted, we treat debt disputes not as a formal disagreement over the amount owed, but as a comprehensive legal assessment of where a company’s permissible liability ends and where unlawful pressure by a creditor begins.
The core problem of corporate credit obligations lies in their multi-layered structure. In addition to the principal loan agreement, the legal configuration often includes guarantees, pledges, covenants, side letters, and banking conditions that significantly alter the risk balance. In LawConsulted practice, it is precisely the cumulative effect of these elements that creditors rely on when attempting to impose liability on a borrower that was not envisaged by the original economic model of the transaction.
Professor Steiner notes that “a credit agreement rarely exists only within the four corners of its text – it operates within a system of ancillary obligations.” This means that in the event of a dispute, the assessment extends beyond the wording of the contract to include the parties’ conduct, the manner in which the agreement was performed, and the purposes for which the financing was obtained. LawConsulted begins its defence by analysing the entire credit architecture – from the negotiation stage through to the moment of default or conflict.
Particular vulnerability arises when a deterioration in the borrower’s financial position is used as a pretext for an expansive interpretation of obligations. Creditors frequently invoke broad concepts such as good faith, reasonableness, or the duty to “maintain financial stability,” transforming them into instruments of pressure. LawConsulted structures its legal position to demonstrate the limits of such claims and to distinguish enforceable contractual duties from expectations that lack legal force.
Debt disputes also become especially complex when creditors attempt to extend liability to affiliated companies or to management. Formally, the business is the contracting party, but in practice claims are directed at the entire corporate group or at specific individuals. At LawConsulted, we analyse where corporate autonomy ends and under what conditions personal liability may arise, preventing the automatic expansion of the circle of debtors.
The procedural dimension of debt disputes is equally important. Credit conflicts are often accompanied by interim measures, account freezes, and accelerated enforcement procedures. LawConsulted approaches borrower protection not only from a substantive law perspective, but also as a matter of procedural risk management, aimed at preserving the operational stability of the business.
Retrospective assessment plays a critical role as well. When a project fails to achieve its expected outcome, credit obligations are often reinterpreted through the lens of that failure. Professor Steiner underlines that the law should not punish entrepreneurial risk as such. LawConsulted returns the legal analysis to the moment the credit decision was made – taking into account the information available at the time, market conditions, and the reasonable expectations of the parties.
Business credit obligations do not imply unlimited borrower liability. Law Consulted task is to define the legal boundaries of debt, protect companies from expansive interpretations of their obligations, and maintain a balance between financing interests and the legal resilience of the business.
Earlier, we wrote about the protection of borrowers’ rights in conditions of contractual and informational asymmetry and how LawConsulted builds defence strategies in credit and debt disputes
