Financial Restructuring and Bankruptcy

OVERVIEW

Loan Modifications, Restructurings, Foreclosures and Asset Recovery

We advise financial institutions, as well as public and private investors, regarding strategies for consensual restructurings and alternatives to litigation of non-performing credit facilities and structured finance transactions. We represent clients as lenders or co-lenders, agents, participants and loan purchasers and investors in connection with distressed mortgage or asset-based loans, mezzanine loans and CMBS investments. We have extensive experience in efficiently negotiating and documenting loan modifications, extensions, restructurings, forbearances, discounted pay-offs and sales of loans or participation interests.

Whether enforcing consensual liens on real or personal property, or enforcing judgments obtained through litigation, we routinely prosecute judicial foreclosures and execution sales in state and federal courts. We have significant experience in navigating the specialized rules governing the foreclosure process, including the strategic use of receiverships to sell or preserve collateral value.

Our lawyers are equally skilled in enforcing loans by confession of judgment, if available, or pursuing civil actions to obtain judgments on notes or guarantees. If a confessed judgment is challenged through a petition to open or strike, we will vigorously defend the judgment.   Conversely, if a confessed judgment has been improperly entered, we can defend enforcement. 

We also represent financial institutions and investors in enforcing lenders’ security interests against various types of personal property, including pledged stock and other equity interests, equipment, inventory, accounts receivable, patents, trademarks and other general intangibles. We have substantial experience in liquidating personal property either through judicial proceedings or non-judicially through public auctions or private sales under Article 9 of the Uniform Commercial Code.

Structured Finance Workouts and Dispositions

While turmoil in capital markets can saddle financial institutions with excess debt on their balance sheets, it also creates opportunities for investors to capitalize on market instability. Consequently, expedient sales and purchases of distressed assets has become an attractive strategy. We combine experience in securitization, derivatives, real estate, bankruptcy and distressed asset dispositions to provide legal and business guidance, as well as market insight, to clients that focus on structured debt opportunities. Further, we can often expedite clients’ ventures by drawing on our network of relationships with institutional lenders, servicers and special servicers, underwriters, investors, insurers and funds, as well as real estate owners and operators. Our clients appreciate our skill in managing intercreditor relationships in helping them navigate distressed deals.

Distressed Loan and Asset Sales

Our group has extensive experience in the purchase and sale of commercial loans, participation interests and assets securing loans. We prepare loan sale agreements, perform due diligence, negotiate terms of sale agreements and consummate closing such that our clients’ loans are sold to third parties. In addition, we represent purchasers of such loans. In that regard, we perform the same functions but with an emphasis on due diligence regarding loans documents and collateral.

We have represented numerous entities in bankruptcy that have sold their assets through Section 363 sales. We have also represented numerous purchasers of such assets. In these instances, we add value to the transaction by not only negotiating the asset purchase agreement and drafting and reviewing all relevant transaction documents, but also drafting the pleadings filed in the bankruptcy proceedings to permit consummation of a sale or purchase to our clients’ benefit. This may include court orders approving the sale and bidding procedures, we ensure that our client understands the process, considers all contingencies and has the best possible opportunity to be the successful bidder at an auction sale.

Creditor and Interested Party Representations

Our lawyers have substantial experience advising secured and unsecured creditors, Creditors Committees, and insurers seeking to enforce their rights and protect their claims in bankruptcy proceedings. We help secured and unsecured creditors file and recover their claims in the bankruptcy proceedings. We also help secured creditors protect their collateral from a diminution in value or waste, and/or obtain relief from the automatic stay to exercise their rights and remedies by foreclosing on, or taking possession of, their collateral. We also monitor the progress of the bankruptcy proceedings to advise our clients if any proposed plan of reorganization or relief might adversely affect their claim, collateral or rights and advise on appropriate action to mitigate their risks.

We represent numerous insurance companies in complex bankruptcy cases filed in courts throughout the country by policy-holders facing asbestos, environmental and other mass tort liabilities. In such cases, we protect the clients’ rights under their policies, related agreements, settlement agreements and collateral through plan objections, prosecution and defense of adversary proceedings, filing claims and motions for payment of premiums and other post-petition insurance obligations and, where appropriate, post-petition settlements. 

In addition, our group represents shopping center/mall owners, property receivers and other landowners in bankruptcy cases filed by national and regional retail tenants. We protect their client-landlord’s rights during the tenant’s bankruptcy proceeding, including moving to compel payment of post-petition administrative rent or to obtain relief from the automatic bankruptcy stay; objecting to motions to extend the time to assume or reject leases, or to assume and assign leases and proposed cure amounts; objecting to store closing, going out of business or lease assumption/rejection procedures motions; objecting to motions to sell assets and assume and assign related leases; or filing proofs of claim for landlords to recover lease rejection damage claims.

To the extent that the debtor or a trustee seeks to sell assets that serve as collateral for our client’s claims, we participate in that process on behalf by either objecting to the sale or making sure that the terms of the sale are satisfactory to our clients. We help ensure the price is satisfactory, that our clients receive all net proceeds to which they are entitled and that any administrative expenses incurred are minimal and reasonable to our clients.

Debtor Representations

We have substantial experience advising distressed businesses as they evaluate options, including Chapter 11 reorganization, Chapter 7 liquidation and out-of-court workouts. We guide clients through the bankruptcy planning and filing process and provide assistance with selling their business or assets in bankruptcy, addressing employment-related issues, bringing avoidance actions or other litigation or accomplishing an orderly wind-down. We also help distressed businesses explore alternatives to bankruptcy, including negotiating loan modification and forbearance agreements with their secured and unsecured creditors and implementing orderly out-of-court workouts.

Litigation

Our group represents defendants in preferential transfer and fraudulent conveyance avoidance actions, and breach of fiduciary duty, filed by debtors or trustees in Chapter 7 or 11 bankruptcy cases. We aggressively defend avoidance claims by seeking to have them dismissed or favorably settled. We often assert the ordinary course of business, subsequent new value and other defenses to eliminate or reduce liability for a preference claim. We also have resolved many avoidance claims through mediation.

We regularly defend former directors and officers of companies in bankruptcy against allegations of negligence, fraud and breach of fiduciary duty. We frequently defend lenders, suppliers, vendors and other creditors in adversary proceedings relating to breach of contract, property turnover and other claims.

Representation of Trustees and Other Professionals

Members of our group represent - and serve as - bankruptcy trustees, financial advisors, trustees of liquidating trusts and other professionals in bankruptcy cases. We obtain the appointment of professionals, represent them during the proceedings, prepare fee applications, resolve disputes regarding the payment of their fees, and negotiate litigation and liquidating trust agreements on their behalf. We have prosecuted preference and other avoidance actions and resolved claims objections on behalf of bankruptcy trustees to maximize the recoveries of unsecured creditors.

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