A recent Chuck E. Cheese decision denies the debtor’s/tenant’s request to defer paying rent after the 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.
In this video mini-series, Real Estate partner Caroline Harcourt and Insolvency & Restructuring partner Patrick Fitzmaurice and special counsel Jon Doolittle join forces to explore some of the key components of a commercial foreclosures. The trio provide a general overview of the pre-foreclosure process, outline important considerations when drafting a foreclosure complaint, offer guidance on the steps that go into obtaining a judgement of foreclosure and sale, and flag some a variety of important post-sale issues. Watch the video here.
An intercreditor agreement (ICA) involving a construction loan raises a host of complicated and unique issues that are not addressed in the typical ICA. As more fully described in the prior alert on Intercreditor Agreements (ICAs), and by way of a short introduction to mezzanine loans generally, the mezzanine lender in a single mezzanine loan structure makes a mezzanine loan to the mortgage borrower’s owner(s) (the “mezzanine borrower”) and the mezzanine loan is secured by the mezzanine borrower’s equity interest in the mortgage borrower (a single purpose entity that is not the property owner entity). In “Distressed Real Estate During COVID-19: Mezzanine Loans Behind Construction Loans—Special Considerations and Intercreditor Agreement Provisions”, colleagues Caroline A. Harcourt, Paul Shapses and Jacob A. Axelrod discuss that construction loans with companion mezzanine loans raise a host of concerns that are unique to more standard ICAs between a mortgage lender and a mezzanine lender.
Mortgage lenders and mezzanine lenders considering amendments to loan documents, forbearance, loan transfers, the exercise of remedies or deeds in lieu of foreclosure, and other loan-related fact patterns will need to revisit and comply with the provisions of their respective ICAs. In “Distressed Real Estate During COVID-19: The Role of Intercreditor Agreements between Mortgage Lenders and Mezzanine Lenders“, colleagues Caroline A. Harcourt and Jacob A. Axelrod discuss how the current distressed real estate environment will put many of these arrangements to the test.
A recent court decision in New York found that current market conditions in the real estate market justify delaying noticing mezzanine real estate foreclosures until October 15, 2020. In “Distressed Real Estate During COVID-19: Court Finds UCC Foreclosure “Commercially Unreasonable” Because of Coronavirus-Related Market Turmoil“, colleagues Caroline A. Harcourt, Patrick E. Fitzmaurice, Russell DaSilva and Jacob A. Axelrod discuss a recent New York Supreme Court Order.
Illinois Governor’s Executive Order prohibited sale of food or beverages for on-premises consumption held to partially excuse restaurant tenant’s rent payment obligations. In “Court Holds COVID-19 Executive Order Triggers Lease’s Force Majeure Clause, Excusing Some Rent Obligations,” colleagues David L. Miller, Patrick J. Potter, Jessica H. Lee, and
A recent court order issued as part of an ongoing litigation involving a Manhattan hotel held that a mezzanine lender may proceed with a UCC foreclosure sale of the mezzanine loan collateral despite N.Y.E.O. 202.8, which prevents creditors from initiating judicial foreclosures. In “Distressed Real Estate During COVID-19: New York State Court Order Finds UCC Foreclosures Are Not Suspended by New York E.O. 202.8.,” colleagues Robert J. Grados, Caroline A. Harcourt and Jacob A. Axelrod addresses the court’s denial of injunctive relief to the UCC foreclosure and determination that damages were an adequate remedy may have significant effects even after the COVID-19 pandemic, and also to mezzanine borrowers considering their defenses to UCC foreclosure proceedings.
In the wake of the COVID-19 pandemic, the Supreme Court of Texas along with many Texas counties have issued moratoriums on evictions and foreclosures, the applicability of which remains varied and depends on local orders. In “Texas Restricts Evictions Due to COVID-19: Landlord Considerations,” colleagues Hannah Hollingsworth and Adam J. Weaver address that even though evictions are currently on hold, landlords should carefully review their leases and continue to fulfill their obligations thereunder in order to protect their rights once the courts have reopened.
In the wake of the COVID-19 pandemic, governments across the U.S. have issued moratoriums on evictions and foreclosures for residential and commercial properties and other restrictions on available remedies. In “National Landscape of COVID-19 Eviction and Foreclosure Moratoriums Continues to Shift,” colleagues Carmela D. Nicholas and Jeff Clare discuss how the limitations vary on whom they protect and what remedies are restricted, but they do not constitute forgiveness of the underlying obligations.