Loan Workouts and Creditors Rights
McKenna Long & Aldridge (MLA) offers creditors and investors the entire range of disciplines required to analyze, plan and implement resolution programs for problem loans and problem loan portfolios.
Firm attorneys have successfully represented both financial institutions and major investor groups in the valuation, acquisition, resolution and/or disposition of problem credits, nationally and internationally. We have also collaborated with European counsel to design "turnkey" legal and business strategies for problem asset resolution and disposition in the European marketplace and have acted in a senior advisory capacity on major debt portfolio acquisitions in Europe.
Further strengthening our service in this area is the addition of Luce Forward and their Distressed Real Estate Asset Team. This highly regarded team offers broad practical experience in all areas of real estate ownership, development, and finance, as well as a proud history of successfully developing viable alternatives to best position clients and their troubled assets.
The unmatched experience in handling all aspects of troubled real estate includes:
- representing debtors and lenders in bankruptcy proceedings and pre-bankruptcy planning.
- assisting sellers and purchasers of real estate assets in bankruptcy proceedings with a team of highly-skilled real estate transactional, land use and bankruptcy attorneys.
- negotiating loan modification and forbearance agreements for borrowers and lenders.
- assisting purchasers of troubled real estate secured loans from financial institutions and government agencies (including due diligence and underwriting analysis of underlying real estate).
- representing borrowers, lenders and purchasers in non-judicial foreclosures and deed in lieu transactions.
- representing lenders in the appointment of receivers and judicial foreclosures.
- representing lenders and purchasers in the development and sale of foreclosed properties.
- providing advice regarding broken condominium projects and other distressed residential projects (including restructuring projects to make them economically viable, and guiding clients through the maze of associated land use, Department of Real Estate and other regulatory issues).
- restructuring Mello-Roos and other public infrastructure bonds affecting distressed properties.
- assessing tax issues such as cancellation of indebtedness income, insolvency and net operating losses.
- representing foreign entities and individuals in the acquisition of U.S. distressed real estate including loan portfolios, properties owned by banks or the U.S. government and assets of developers.
Our traditional legal services include problem loan workouts as well as creditors' rights litigation and remedy enforcement and defense.
Problem Loan Workouts
Working with the concept that a negotiated, voluntary settlement—without litigation or bankruptcy— is the most efficient means of dealing with a problem asset, our seasoned professionals handle workouts of credits of all sizes and levels of complexity, from single-asset real estate loans and commercial loans to local or regional companies, to multi-bank credits to major national real estate and operating companies. Our lawyers structure and consummate workouts of all different types, from traditional economic restructurings, to collateral recovery or "liquidation" workouts, to "prepackaged bankruptcy plans." For each workout, MLA brings the experience and resources necessary to:
- conduct complete due diligence, both legal and business, in connection with the credit and the collateral
- establish a workout strategy, timetable and system of attorney accountability
- devise the most appropriate legal structure for the workout
- negotiate the workout
- document and close the workout
Creditors' Rights Litigation; Remedy Enforcement and Defense
Although the negotiated workout is the preferred method of problem asset resolution, remedy enforcement is a reality of the resolution process. Our firm's litigation professionals conduct and coordinate legal proceedings throughout the United States—providing the entire range of remedy-enforcement, defense and other creditors' rights services, including:
- real and personal property foreclosures
- actions on notes and guaranties
- receivership proceedings
- rent assignment enforcement
- other actions to protect and preserve collateral
Our litigators regularly defend against lender liability claims and other claims and counterclaims by borrowers and guarantors. These lawyers also work closely with the practice's workout lawyers to counsel financial institutions, investor groups, asset management companies and other holders of loan portfolios on practical, day-to-day means of minimizing and managing risks of lender liability claims which can arise as a consequence of workout efforts.
In addition to the in court remedy enforcement actions conducted by our litigators, our transactional workout lawyers also regularly conduct nonjudicial mezzanine loan foreclosures of pledged equity interests under the Uniform Commercial Code.
Further, our professionals consult with clients concerning the entire spectrum of issues presented by problem loan portfolios in today's marketplace. These services include: Asset and Portfolio Due Diligence, Analysis and Strategy; Asset and Portfolio Management Systems; and Asset and Portfolio Dispositions
Asset and Portfolio Due Diligence, Analysis and Strategy
We offer a broad range of consulting services to financial institutions, investor groups, asset management companies and other holders of loan portfolios, including:
- Performing due diligence and legal risk analysis with respect to entire portfolios, to assist internal controllers, credit review committees and senior management in identifying and prioritizing problems and formulating resolution objectives and policies.
- Evaluating ongoing workouts of selected major credits, to give in-house workout specialists "second opinions" regarding proposed strategies and structures.
- Providing advice with respect to participations with other institutions and investment groups.
Asset and Portfolio Management Systems
We regularly consult with financial institutions, investor groups, asset management companies, and other holders of loan portfolios to:
- Implement internal systems and "best practices" for managing workouts.
- Devise and implement internal policies for evaluating and managing risks associated with the administration of loans and workouts.
- Help train institutions' special assets personnel.
- Conduct seminars and training workshops for workout or special asset officers, credit analysts and other asset management personnel.
Asset and Portfolio Dispositions
We assist financial institutions, investor groups, brokerage firms and government agencies in the creation and development of financing structures and other techniques to facilitate the packaging, marketing and bulk disposition of large pools of problem assets. In addition, we perform due diligence, legal risk analysis, and strategy consulting with respect to specific assets and portfolios, to assist both sellers and acquirers of assets or portfolios.
- Dissolving Community Redevelopment
- Receivership: Distressed Real Estate
- Receivers Maximize Value of Distressed Assets, While Saving Lenders Money
- After 40 years idle, landmark sold
- Lenders worry about mortgage relief
- Next on the hit list: Could it be the commercial real estate appraisals?