The “Loan Attention Team” is a working group of transactional, litigation and creditors’ rights lawyers and legal assistants assembled to provide the broadest perspectives of support to a lender administering a loan that has matured or is non-performing.
Our approach to modification, workout, foreclosure, and enforcement practice is to first understand what the client wants to achieve; then provide a document review; followed by a clear assessment of alternatives available, and then determine strategy and positioning with the client. We have no formulaic solution to all problems, although the goal to us always is to advance the client’s position in terms of control of its destiny and efficiency for the future. We work with the client to enable it to act quickly to restructure terms or secure collateral, without litigation where practicable.
We work to craft the best business solutions, as well as to be prepared to pursue whatever action is necessary. We fashion terms designed to keep the loan performing going forward, while providing the lender with additional means of quickly capturing collateral in the event of a renewed default (e.g., waivers of redemption, deed in lieu provisions, receivership provisions, guaranties, additional collateral, etc., which could not be obtained upon loan creation, but can, in most cases, be obtained when restructuring). If the lender has made a business decision to restructure the loan, we are experienced in documenting loan modifications and loan extensions, creating A-B notes, instituting lockbox accounts, disposition plans, and other agreements appropriate to the loan transaction. We are familiar with servicing obligations and intercreditor considerations that must be taken into account; and we work constructively with loan officers and in-house counsel to achieve the client's goals.
When a loan or borrower appears beyond rescue, our experience has shown that a realistic litigation assessment is critical. Prolonged litigation can obviously extend non-performance, and we seek to motivate a cooperative turnover of collateral and/or creatively expedite the enforcement process. Deed in lieu transactions often become more likely when the borrower perceives aggressive enforcement. We have a reliable foreclosure procedure, using trained associates and legal assistants to prepare nonjudicial foreclosures and to pursue collection and cash control remedies, supervised by experienced partners. We locate and pursue alternative borrower assets, as well as actively pursue guarantor claims and all avenues to collection. We regularly prosecute judicial foreclosures, and have achieved appointment of receivers in both judicial and non-judicial foreclosures.
We are also prepared to assist a lender in disposing of owned assets. For one client, we created an on-line auction bidding process that resulted in a highly successful realization of value. The auction site included access to title work, survey and other due diligence items necessary to satisfy conditions of purchase.
Our skills, of course, include bankruptcy. We have successfully obtained dismissal of filings for bad faith. We have obtained lift of stay orders, and have successfully captured rental income streams for lenders through rent assignment implementation, and litigated the rights to rents post petition and post foreclosure. Although not all bankruptcy cases can be managed so forcefully, our experience positions us to take the courses most likely to succeed.
Our collective experience in this work covers a broad range. Here are a few examples:
- For MetLife, loan modifications, workouts, and/or foreclosures of high value properties in the office, retail and commercial, and multi-family markets. In several of these matters, we dealt with bankruptcy filings and were successful in pursuing remedies and collecting rents during the case, and, in each situation, reaching a conclusion that advanced the lender’s interests to its satisfaction. We have successfully had a bankruptcy case dismissed based on abusive filing. We have successfully applied the law allowing a lender to receive rents post-foreclosure. We recently completed a loan modification extending the term of a loan, creating multiple tranches of debt integrated with new borrower capital, with added lockbox and reserve features.
- For Prudential Insurance Company of America, as a borrower and owner of an office/retail complex, we negotiated a restructuring of its loans with several banks.
- In representing Orix Capital Markets, its predecessor, BancOne Consulting and Management Company, and its successor, Keycorp Capital Markets, each acting within its authority as special servicer, we have documented and negotiated loan modifications, and foreclosed loans, of office, light manufacturing, and multi-family properties.
- We worked with Merrill Lynch Business Financial Services and its other counsel to document prospective acceptance of a deed in lieu and to commence a judicial foreclosure of Michigan property in a multi-state portfolio, where strategy of timing of action and the effect of action in various jurisdictions would impact rights in others.
- For an out-of-state bank, we obtained appointment of a receiver of a troubled Michigan office building and coordinated remedies in a cross defaulted loan with security in another jurisdiction. In the process, we revised the building's lease to facilitate the receiver's marketing of the property.
- Many national and community-based banks and other financial institutions have relied on us in loan modification negotiation, and deed in lieu transactions, and foreclosures involving a range of income-producing properties, including a regional shopping center, multi-family projects, and licensed properties such as nursing homes and hotels. Some of these have been contested vigorously and others have been resolved through negotiated resolution.
- For Freddie Mac, we have handled foreclosures, receivership, bankruptcy, and REO dispositions of a dozen or more apartment complexes.