Articles Posted in Distressed Real Estate

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Motel-565882567-e1648218576751-300x224Single asset real estate (SARE) is a unique classification under the Bankruptcy Code with implications for both debtors and lenders. SARE classification is apparent for a property such as a shopping center, apartment complex or office building where the debtor’s income is generated exclusively from real estate operations, but is less apparent for a hospitality property where the debtor may provide incidental services. Although a full-service hotel with a pool, fitness center and restaurant is not a SARE property, recent trends indicate that even hourly motels offering little-to-no onsite amenities may not qualify for SARE classification. Because SARE classification is viewed as providing lenders with distinct advantages in a chapter 11 case, property owners seeking chapter 11 protection to reorganize often try to avoid that classification, while lenders seek to impose it through sometimes costly litigation.

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In episode # 30 of Industry Insights podcast, Christian Salaman returns to join host Joel Simon to provide insights on the current recovery of the hospitality industry, the latest trends for owners and managers and the impact across other asset classes like senior residences and student housing.Industry_Podcast_cover-update-final-bottom Continue Reading ›

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In episode #29 of Industry Insights podcast, Andrew Weiner joins host Joel Simon for the second episode of our two-part examination of the Corporate Transparency Act (CTA). In this episode, Weiner turns his attention to the unanswered questions and ambiguity underlying phrases like “beneficial owner” and “substantial control.”

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One year into the pandemic, courts have almost uniformly found that COVID-19 does not permit commercial tenants to avoid their rent payment obligations. In this case, the court continued that trend, ruling that the pandemic was not a “casualty” that permits a tenant to abate its rent payments or cancel its lease. Authors Patrick J. Potter, Christian A. Buerger, Hugh M. McDonald, Patrick E. Fitzmaurice, and Jonathan Doolittle discuss a new case from the Southern District of New York that extends the trend of courts enforcing leases against tenants forced to close due to the impact of the COVID-19 pandemic in “Court Finds Pandemic Does Not Satisfy Lease’s Casualty Clause.”

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President Biden has now signed the American Rescue Plan Act, a $1.9 trillion investment and stimulus package designed to address the ongoing COVID-19 pandemic, into law. Matthew Oresman, Elizabeth Vella Moeller, Craig J. Saperstein, Brian E. Finch, Aimee P. Ghosh, Rose Fowler Lapp discuss the relief bill which includes a new round of stimulus payments, along with dedicated aid for state and local governments, support to expand COVID-19 vaccination and testing programs, housing support, cybersecurity investments, support for the restaurant industry, and funds for school reopening plans. The alert, Congress Passes $1.9 Trillion COVID-19 Relief Package also provides an overview of how the bill affects  housing, mortgage, rental and utility assistance.

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On March 5, 2021, the SBA published an overview of eligibility requirements and a preliminary application checklist for the Shuttered Venue Operators Grant (Grant) Program. The overview of eligibility requirements clarifies ownership restrictions, prohibited activities, and business, operational and facility requirements for each type of business potentially qualifying for Grants.  Colleague David L. Miller discuss the SBA recently published requirements in “SBA Issues Eligibility and Application Guidance for Shuttered Venue Grants.”

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Real Estate partner Christian Buerger and Insolvency & Restructuring partner Hugh McDonald discuss COVID’s impact on commercial leases and an overview of the bankruptcy process the latest Swimming Lessons Series presentation.

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Over the past year, our attorneys have explored numerous insolvency topics affecting real estate. Together, the alerts in this series tackle many facets (and potential applications) of the Bankruptcy Code as potential balm and bane for owners, landlords and lenders trying to navigate a landscape made exponentially more treacherous by COVID-19 in Insolvency Issues, Real Estate and COVID-19.

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Real Estate partner Andrew Weiner and Tax partner Craig Becker discuss the intersection of transfer tax with enforcement in distressed real estate in New York and California in the latest Swimming Lessons Series presentation.

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A recent Chuck E. Cheese decision denies the debtor’s/tenant’s request to defer paying rent after thChuck-E-Cheesee 60-day “rent holiday.” The Bankruptcy Court applied the “plain language” rule to hold that section 365(d)(3)’s rent holiday cannot be extended. In “Bankruptcy Court Rules Bankruptcy Code Does Not Permit Extended Rent Holiday for Retail Debtors” colleagues, Patrick J. Potter, Patrick E. Fitzmaurice, and Kwame O. Akuffo discuss that after that initial 60-day period expires, the debtor is required to pay post-petition rent. The court did not order the debtor to make a rent payment on the 61st day and deferred ruling on landlord remedies for tenants failing to pay post-petition rent, regardless of when the rent accrued.

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