Reconceptualizing Lender Liability for Satellite Projects

In 1975, Margaret Hambrecht Douglas-Hamilton cautioned that “whenever a creditor contemplates taking a hand in the management of a financially troubled debtor, it should think of its deeper pockets and keep its hands there.” Her prescient remark went unheeded. As a result, ‘lender liability’ litigation has kept lawyers busy and courtrooms packed. Yet Douglas-Hamilton’s words ring true today – and especially, as I argue in this paper, for those lenders that finance satellite projects.The paper is structured as follows. In Section 3, I describe and reconceptualize lender liability by presenting two broad categorizations for how this liability arises. These categorizations are reliance and control. In Section 4, I then explore the specific features of satellite financing that magnify lender liability risk. A risk management discussion then follows in Section 5, in which I link satellite financing’s specific features to the reliance and control categorizations of lender liability. Section 6 concludes