Loan Workouts, Bankruptcy & Commercial Remedies: Lenders

Cox, Castle & Nicholson LLP represents lenders, regular and special loan servicers, and buyers of distressed loans and properties in defense and enforcement litigation, transactional workouts, and bankruptcy matters. Our representation of lending clients extends to senior lenders, mezzanine lenders and loan participants (both pari passu and lenders in A/B loan structures) in bridge, stabilized and construction loans over a variety of product types ranging from land, multifamily, retail, and office to hotel.

Workouts. A successful workout requires the ability to deal with a wide variety of issues, and we take advantage of the unique wealth of information and expertise possessed by our Firm’s colleagues. Our overall approach to workouts is a “business oriented” one that sensitizes the client to relevant legal issues and tailors the legal response to conform to the client’s business considerations. Given our extensive lending practice, we are able to leverage our experience in the “best practices” for lenders to advise lending clients of the risks, negotiating points and strategies of any workout. In connection with those types of transactions, we will:

• assist the client in gathering data relative to the current state of the borrower and the project
• conduct a forensics audit on the file (with a special focus on correspondence between the borrower and the lender), the existing documentation, the current status of liens and the current status of title
• advise the client as to the need, viability, enforceability and desirability of, and draft, pre-negotiation letters, loan modifications, forbearances, and deeds in lieu of foreclosure
• advise the client on the enforceability of loan documents and guarantees, special issues that may arise in the context of mezzanine loans, the implications of inter-creditor agreements, the application of California’s anti-deficiency rules and the implications of California’s one form of action rule

Bankruptcy. We have considerable experience in renegotiating troubled loans, addressing lender liability exposure, strengthening the lender’s position if the borrower ultimately files bankruptcy, and making arrangements for resumption of loan payments and/or setting deadlines for disposition or refinancing of property. Our attorneys have in-depth experience in:

• litigating the use of cash collateral
• negotiating stipulations for use of cash collateral
• obtaining relief from the automatic stay
• moving to dismiss “bad faith” filings
• litigating and negotiating adequate protection payments, preference actions, and fraudulent transfers
• obtaining appointment of Chapter 11 Trustees
• moving to compel assumption and/or rejection of real or personal property leases
• negotiating consensual plans of reorganization, objecting to disclosure statements and plans of reorganization and undertaking other “creditor” measures to control the plan process (such as purchasing claims of secured and unsecured creditors, and proposing and confirming competing creditors’ plans)

Judicial Foreclosures and Receiverships. Our attorneys have extensive experience in receiverships, prosecuting and defending judicial foreclosure matters of varying sizes and degrees of complexity, and obtaining and collecting deficiency judgments. Our experience covers a full range of project types, including hotels, apartments, office buildings, shopping centers, and partially completed projects of various kinds, and includes successful litigation to maintain receivers in place, notwithstanding the subsequent filing of a bankruptcy petition by the borrower .

We are experienced in representing lenders to obtain appointment of, and to work with, receivers in order to:

• collect income from real property collateral
• protect property from waste or material injury pending foreclosure
• complete improvements and cope with environmental problems, mechanics’ liens and construction defect exposure
• recover diverted collateral
• aid in execution of judgments
• seize control of partnership assets during dissolution and wind up partnership affairs
• conserve property pending the outcome of litigation
• assert control over assets and collect debts during a corporate dissolution and divide corporate assets among stockholders
• act as an equity receiver, including operating a borrower’s business pending the resolution of litigation

Bond Litigation. We are experienced in litigation matters relating to municipal bond financing for real estate development and related infrastructure facilities and services. We represent local government entities in foreclosing upon delinquent Mello-Roos special taxes, as well as both lenders and borrowers in disputes related to projects financed through Multi-Family Revenue Bonds.

Defense of Lender Liability, Securities, and RICO Claims. We represent lenders in defending a wide variety of lender liability claims, including claims involving alleged securities fraud and alleged violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act in both state and federal courts. Our experience includes prosecuting actions involving RICO and securities fraud on behalf of institutional and individual lenders.