Foreclosure on UCC collateral speeds lender’s takeover of troubled real estate

A recent bankruptcy New York court decision1 highlights a less commonly used option for lenders to take control of troubled real estate projects. The lender obtained relief from the automatic stay to foreclose on membership interests pledged to secure its mezzanine loan instead of foreclosing on its mortgage against the underlying real property.  

Here is the case, and what lenders can learn from it.  

The Case

Filed under:
USA, New York, Banking, Insolvency & Restructuring, Litigation, Real Estate, Herrick Feinstein LLP, Bond (finance), Bankruptcy, Debtor, Collateral (finance), Injunction, Hedge funds, Mortgage loan, Foreclosure, Condominium, Default (finance), Secured loan, Uniform Commercial Code (USA), United States bankruptcy court
Authors:
Stephen Selbst , Paul Rubin
Location:
USA
Firm:
Herrick Feinstein LLP
Hope for Madoff investors hit with clawback lawsuits

A recent decision may provide important ammunition to Madoff investors against "clawback" actions brought by the SIPC Trustee overseeing the Madoff bankruptcy estate (the "Madoff Trustee").1 The Madoff Trustee alleges that investors who withdrew monies from their accounts fraudulently transferred estate property under state and federal law, regardless of whether they lost more than they withdrew.

Filed under:
USA, New York, Capital Markets, Insolvency & Restructuring, Litigation, Herrick Feinstein LLP, Bankruptcy, Fraud, Threatened species, Good faith, Investment funds, Bad faith, Securities Investor Protection Corporation, Trustee, United States bankruptcy court
Authors:
Howard R. Elisofon , Stephen Selbst , Frederick Schmidt , Paul Rubin
Location:
USA
Firm:
Herrick Feinstein LLP
Important warnings against “gifting plans” and hostile takeover attempts in Chapter 11

The Second Circuit Court of Appeals' February 7, 2011 decision, which reversed the confirmation of a plan of reorganization for DBSD North America, Inc. ("DBSD")1 is likely to have an impact nationwide.

Filed under:
USA, Insolvency & Restructuring, Litigation, Herrick Feinstein LLP, Bankruptcy, Debtor, Unsecured debt, Interest, Debt, Good faith, Bright-line rule, Bad faith, Unsecured creditor, Sprint Corporation, Dish Network, Second Circuit, United States bankruptcy court
Authors:
Stephen Selbst , Paul Rubin
Location:
USA
Firm:
Herrick Feinstein LLP
The cheese stands alone": United States trustee forces transfer of Houghton Mifflin Harcourt cases despite objection of all other parties

Congratulations!  You just successfully negotiated a prepackaged chapter 11 plan of reorganization for a multi-billion dollar enterprise which leaves general unsecured creditors unimpaired and has been unanimously approved by the debtors' creditors.  It's smooth sailing from here, right?

Filed under:
USA, Insolvency & Restructuring, Litigation, Herrick Feinstein LLP, Bankruptcy, Debtor, Secured loan
Authors:
Paul Rubin , Stephen Selbst , Justin B. Singer
Location:
USA
Firm:
Herrick Feinstein LLP
Supreme Court clarifies lenders' right to credit bid

In Radlax Gateway Hotel, LLC v.

Filed under:
USA, Banking, Insolvency & Restructuring, Litigation, Herrick Feinstein LLP, Debtor, Supreme Court of the United States
Authors:
Stephen Selbst , Paul Rubin
Location:
USA
Firm:
Herrick Feinstein LLP