For many hotel owners, it is an all-too-familiar story: occupancy is down, and even though operating expenses have been cut to the bone, there is just not enough money to go around. It seems there is always another bill: franchise fees, payroll, real property taxes, debt service—the list goes on. The unfortunate result is that either because of a failure to make a payment or a breach of some other covenant, the owner finds itself looking at a default notice from its lender. When dealing with a loan default, there are four things the hotel owner needs to understand.

Title II of the Dodd-Frank Act establishes a new non-judicial receivership al-ternative for resolving troubled financial companies that could threaten the stability of the U.S. financial system (“Covered Financial Companies”), as described further below. The Federal Deposit Insurance Corporation (“FDIC”), on October 12, 2010, issued a notice of proposed rulemaking (the “Proposal”) to begin to implement the provisions of Title II.

The United States Court of Appeals for the Sixth Circuit Court recently affirmed a Bankruptcy Appellate Panel that held that a bank which loaned an individual the funds to buy a motor vehicle could not overcome the avoidance of its lien as a preferential transfer after the person filed for bankruptcy. The Court so found because the lien at issue was not perfected under Kentucky law within the time frame necessary to be considered an exception to the avoidance of preferential transfers under the Bankruptcy Code.

On Friday, the Florida Office of Financial Regulation closed First Bank of Jacksonville, headquartered in Jacksonville, Florida, and appointed the FDIC as receiver.

On Friday, the Office of the Comptroller of the Currency closed The First National Bank of Barnesville, headquartered in Barnesville, Georgia, and appointed the FDIC as receiver.

On Friday, the Florida Office of Financial Regulation closed Progress Bank of Florida, headquartered in Tampa, Florida, and appointed the FDIC as receiver.

On Friday, the Georgia Department of Banking and Finance closed The Gordon Bank, headquartered in Gordon, Georgia, and appointed the FDIC as receiver.

On Friday, the Office of the Comptroller of the Currency closed First Suburban National Bank, headquartered in Maywood, Illinois, and appointed the FDIC as receiver.

On Friday, the Office of Thrift Supervision closed First Arizona Savings, A FSB, headquartered in Scottsdale, Arizona, and appointed the FDIC as receiver.

On October 8, 2010, the FDIC approved a Proposed Rule that would implement certain provisions of its authority granted by Congress in Title II of the Dodd-Frank Act (“Title II”) to act as receiver for covered financial companies (failing financial companies that pose significant risks to the financial stability of the United States) when a Bankruptcy Code proceeding is found to be inappropriate. Prior to the enactment of the Dodd‑Frank Act on July 21, 2010, no unified statutory scheme for the orderly liquidation of covered financial companies existed.