Non-Performing Loans Workout Group
The Gould & Ratner Workout Group was formed to more efficiently and effectively represent lenders with non-performing loans. The Workout Group is comprised of experienced litigators and creditor's rights/bankruptcy counsel plus experienced real estate attorneys who have been through multiple economic downturns. The mission of the Group is to develop solutions which will provide lender clients with the best financial outcomes from their non-performing loans.
Each loan is different. The right solution to one non-performing loan may be the traditional approach of filing foreclosures and collection actions. This approach can also result in bankruptcy filings with the loan being resolved in bankruptcy. Our litigators and creditors' rights/bankruptcy counsel handle these loans.
The right solution to another non-performing loan may be the new reality approach where borrowers and lenders work together to restructure that loan to take into account today's economic reality. Our real estate attorneys handle these loans with our litigators and creditors' rights/bankruptcy counsel standing by in the event a restructuring cannot be worked out.
Gould & Ratner has the experience to help clients to select and then implement the right approach for each loan that will result in the best financial outcome.
Traditional Approach to Non-performing Loans
The traditional approach utilizes the foreclosure process which ends with the a foreclosure sale or with a bankruptcy filing by the non-performing borrower. Thus, our litigators work closing with our creditors' rights/bankruptcy attorneys to achieve the best outcome for our clients.
Our litigators regularly bring foreclosure actions against borrowers in default. We have foreclosed on commercial, retail, and office properties, apartment buildings, farms, partially completed residential developments, industrial, and specialty and mixed-use properties.
Our litigators and creditors' rights/bankruptcy attorneys as part of the traditional approach to non-performing loans bring actions to collect on notes and on personal guarantees and handle the disposition of assets either in bankruptcy or through various out-of-court devices, including assignments for the benefit of creditors.
Since our attorneys represent both debtors and creditors in all aspects of formal bankruptcy proceedings including out-of-court workouts and restructurings, they know what is needed in order to obtain the sale of assets of companies undergoing reorganization. They are knowledgeable about negotiating, litigating, and vetting Section 363 sale procedures. Significant recent representations under the traditional approach include:
- Representation of a major asset-based lender holding mortgages upon approximately 46 separate gas stations and convenience store parcels. A substantial recovery of client's claim was achieved by persuading Chapter 11 Debtor to conduct a Section 363 auction of the real estate. Worked closely with the lender's environmental consultant in order to obtain recovery from environmental insurance carrier.
- Represented major financial institution which held secured debt, the collateral for which consisted of leases on aircraft. Successfully negotiated stipulations for continued adequate protection payments in exchange for debtor's usage of aircraft.
- Represented the FDIC in the Chapter 11 proceeding of a real estate developer, where the FDIC held a first lien position on twenty-one newly constructed condominiums in Illinois. Obtained court approval (over the objections of lien claimants) for debtor's sale of the FDIC's collateral which resulted in a payoff of the FDIC.
- Assisted major asset-based lender to realize on its collateral in Chapter 11 case filed by owner of large suburban restaurant through a sale of restaurant fixtures and equipment to real estate lessor in an Article 9 sale, and through foreclosure of mortgages upon residences of restaurant's principals.
- Assisted Trustee's counsel in Chapter 11 case filed by rivet manufacturer in negotiating cash collateral usage with Debtor's senior lender and then worked with senior lender in procuring sale of substantially all assets of debtor pursuant to Section 363.
The New Reality Approach to Non-performing Loans
In today's economic environment, the traditional approach to non-performing loans of foreclosure and collection does not always provide lenders with the best financial outcome. Filing a foreclosure action gets the borrower's attention and starts the process but can result in less satisfactory outcome where the lender ends up with an unmarketable property in its portfolio and holding uncollectable personal guarantees.
The new reality approach in which the lender works with the borrower to restructure a non-performing loan may be the approach that will ultimately provide the lender with the best outcome. To be successful, the new reality approach requires attorneys who understand the issues that matter to developers and property owners.
Our real estate attorneys have extensive experience representing developers and property owners. They are able to use their knowledge and experience to help lenders identify options and strategies that borrowers will find acceptable and that will maximize the lender's recovery.
This is not our first downturn. On behalf of clients our real estate attorneys have worked with life insurance companies, banks and pension funds to restructure loans secured by income generating properties including office buildings, apartment buildings, shopping centers, business parks, and partially completed subdivisions.