Commercial Real Estate Loan Workouts and Modifications: Forbearance, Foreclosure, and Bankruptcy

Special Servicing Concerns With CMBS/CLO Loans, Protecting Lender and Borrower Interests

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Wednesday, March 11, 2020

Recorded event now available

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Program Materials

This CLE webinar will provide lenders' and borrowers' counsel with an overview of the benefits and limitations of real estate loan workout agreements and alternatives to foreclosure. The panel will explain best practices for negotiating forbearance agreements and minimizing risks associated with borrower bankruptcy. The program will also discuss servicing issues and other concerns in restructuring CMBS and other securitized loans.

Description

Workout agreements allow loans to be restructured to protect an owner's interest in property and the lender's investment. Counsel for both parties must strategically negotiate the contract to ensure that their clients can pursue their original remedies if the workout fails.

Well-structured forbearance agreements or waivers are essential to protecting a lender's position. Counsel representing lenders must anticipate and successfully navigate obstacles during the negotiation process and avoid pitfalls that can result in lender liability challenges by borrowers.

As the borrower's bankruptcy may then follow workout agreements, counsel must also be mindful of the bankruptcy implications when drafting forbearance agreements. Understanding the automatic stay is critical, and stipulations supporting relief in bankruptcy must be carefully considered.

Counsel should prepare special servicers to understand the specific challenges they face in their duties. Special servicers must cope with their responsibilities under pooling and servicing agreements and other rules that can challenge their goal of maximizing recovery. Counsel should also prepare borrowers for the limitations to which special servicers are subject and the range of options available to special servicers so that the parties have the best opportunity to explore realistic outcomes for a workout or resolution of distressed real estate collateral assets.

Listen as our authoritative panel of attorneys discusses best practices for crafting loan workout agreements that protect the parties' interests, minimize liability for lenders, and anticipate and manage risks associated with borrower bankruptcy. The panel will also discuss unique issues and considerations for special servicers of securitized loans.

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Outline

  1. Alternatives to foreclosure
  2. Forbearance agreements
  3. CMBS/CLO loans and special servicers
  4. Bankruptcy risks and issues

Benefits

The panel will review these and other key issues:

  • When are loan workouts an optimal--or even viable--option for borrowers and lenders?
  • What are the critical provisions to include in the forbearance or waiver agreement?
  • What unique risks does the borrower's bankruptcy pose, and how can counsel minimize these risks in crafting loan workouts?
  • What are the specific and intricate rules that special servicers face when resolving defaulted CMBS loans?

Faculty

Dickey, Allen
Allen J. Dickey

Partner
Faegre Drinker Biddle & Reath

Mr. Dickey is a real estate and finance attorney who advises real estate funds, opportunity funds, real estate...  |  Read More

Velocci, Frank
Frank F. Velocci

Partner
Faegre Drinker Biddle & Reath

Mr. Velocci resolves disputes for clients through litigation and arbitration in real estate, telecommunications, health...  |  Read More

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