Commercial Real Estate Lawyer Blog

When a real estate development is carved-up in such a way as to create multiple owners with different types of interests, trying to structure a workout package that pleases everyone can be extremely difficult. Often, the debtor's tools in bankruptcy - to discharge, prioritize, bring in new money, avoid, recapture, limit, and cramdown - are the only ways to try to salvage the development. This program examines the use of such remedies in the context of one such multi-owner structure - the condo/hotel - and why receiverships simply don't provide enough recognized controls.

Continue reading "Mixed-Use Bankruptcies - Not Trying to Please Everyone" »

The plan of reorganization is one of the most critical documents in a Chapter 11 bankruptcy proceeding. Even before declaring a default under a mortgage or deed of trust, a secured lender needs to plan ahead by considering, among other things (a) what remedies the lender has at each step of a bankruptcy proceeding; and (b) whether the borrower/debtor can, at each such step, propose a sufficient-enough plan of reorganization to prevent the lender from realizing upon those remedies. Such planning will also help the lender predict how long the bankruptcy proceeding is likely to take, what it is likely to cost, and what the lender's risks of adverse consequences, such as a cramdown, are. If nothing else, such planning will help the lender to determine what terms it should offer in workout negotiations.

As a Chapter 11 bankruptcy proceeding progresses, a secured lender will want to consider seeking in the following order in light to thedebtor's ability to then propose a sufficient-enough plan of reorganization: (a) a lift Stay, (b) a conversion or dismissal, and (c) counting the classifications and the votes to avoid a cramdown.

Continue reading "Steps a Secured Lender Should Consider in a Chapter 11 and the Role of a Proposed Plan of Reorganization at Each Step" »

A tenant's right to assume, and then possibly assign, its lease involves more than whether the tenant has met the statutory criteria. Procedural issues are involved such as whether and when to hold an auction, with or without a stalking horse bid; whether the stalking horse bid, or the bidding terms and procedures governing any such auction, unduly favor the stalking horse bid over other potential buyers (including the break-up fee); and whether, particularly in the case of multiple leases, the debtor or Trustee should sell designation rights instead of assigning the leases.

Continue reading "A Tenant's Efforts to Assume and Assign a Commercial Lease in a Chapter 11 Triggers Lots of Issues to Fight About" »