Articles Posted in Distressed Real Estate

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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, Alexander B. Ginsberg, Aimee P. Ghosh, Zachary M. Kessler, 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.  Colleagues Alexander B. Ginsberg, David L. Miller, and Toni Suh discuss the SBA recently published requirements in “SBA Issues Eligibility and Application Guidance for Shuttered Venue Grants.”

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Covid-Commerical-Lease

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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The Corporate Transparency Act creates a federal beneficial ownership registry for corporations, LLCs and “other similar entities.” The act creates new and unprecedented reporting obligations relating to entity structures commonly used in private real estate development. Colleagues Christian A. Buerger, David L. Miller, Andrew J. Weiner and Aaron R. Hutman discuss the recently enacted the Corporate Transparency Act (Act) in The Corporate Transparency Act and New Compliance Obligations for Real Estate Developers, Investors, Fund Sponsors and Others. Many aspects of the new law are unclear, having been left to subsequent regulations. Disclosure requirements will apply to new and existing entities. While confidentiality is generally mandated, there are exceptions. Fines and penalties, civil and criminal, are prescribed for a failure to comply.

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Commerical-Foreclosures

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.

 

 

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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.

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