Financial institutions, unsecured creditors, businesses and investors face significant challenges, as well as opportunities, as a result of the ebbs and flows of the credit and real estate markets. The Financial Restructuring and Bankruptcy Group is well qualified to help clients navigate the challenges and opportunities that have arisen out of this challenging environment. Because of our experience with a variety of complex, high-stress workout situations, we can provide timely legal and business guidance, as well as market insight, to clients seeking to restructure, foreclose, liquidate, sell, buy or workout distressed loans and the underlying collateral.
The Financial Restructuring and Bankruptcy Group provides financial restructuring, asset recovery and bankruptcy-related services to secured lenders/creditors, trade creditors, distressed businesses, trustees, insurers, property receivers and lessors. Our group has extensive experience in all aspects of negotiations, liquidations, loan enforcement actions, credit workouts/restructurings, receivership proceedings, the sale and purchase of distressed loans or businesses, borrower liquidations and bankruptcy-related proceedings and litigation. Members of the group have received bankruptcy trustee appointments, including under Subchapter V, and manage the financial affairs of a debtor’s business through restructurings and bankruptcy proceedings. We focus on creating and implementing practical, cost-effective solutions and strategies for reaching client goals, whether it be a prompt foreclosure proceeding, restructuring, forbearance agreement or other workout transaction.
We represent our clients in the creditor-debtor arena nationwide, with a concentration on matters in the jurisdictions of Delaware, New York, Pennsylvania and New Jersey. Our offices, including Wilmington, New York, Philadelphia, Cherry Hill and Boston are ideally suited for handling matters, especially bankruptcy proceedings, throughout the mid-Atlantic region. Our Delaware office is located three floors above the Delaware Bankruptcy Court. We also act as local counsel for clients seeking representation in bankruptcy proceedings venued in New York and Delaware.
Loan Modifications and Restructurings
We regularly advise and strategize with our client sin connection with consensual restructurings and alternatives to litigation of non-performing credit facilities and structured finance transactions. We represent clients as lenders or co-lenders, agents, participants and loan purchasers and investors in connection with distressed mortgage or asset-based loans, mezzanine loans and CMBS investments. We have extensive experience in efficiently negotiating and documenting complex or standard loan modifications, extensions, restructurings, forbearances, discounted pay-offs and sales of loans or participation interests.
Foreclosures and Asset Recovery
Whether enforcing consensual liens on real or personal property, or enforcing judgments obtained through litigation, we routinely prosecute judicial foreclosures and execution sales in state and federal courts. We have significant experience in navigating the specialized and often arcane rules governing the foreclosure process, including the strategic use of receiverships to sell collateral or preserve collateral value during the foreclosure process.
Our lawyers are equally skilled in enforcing loans by confession of judgment, if available, or pursuing regular civil actions to obtain judgments on notes or guarantees. If a confessed judgment is challenged through a petition to open or strike, we will vigorously defend the judgment.
We also regularly represent financial institutions and investors in enforcing lenders’ security interests against various types of personal property, including pledged stock and other equity interests, equipment, inventory, accounts receivable, patents, trademarks and other general intangibles. We have substantial experience in liquidating personal property either through judicial proceedings or non-judicially through public auctions or private sales under Article 9 of the Uniform Commercial Code.
Structured Finance Workouts and Dispositions
While the recent turmoil in the capital markets has saddled financial institutions with excess securitized debt on their balance sheets, it has also created new opportunities for investors with the vision and resources to capitalize on market instability. Consequently, expedient sales and purchases of distressed structured assets has become an attractive strategy. Our ability to manage the intricacies of various structured products makes us uniquely positioned to help clients navigate the challenges that have arisen out of this lingering distress. We combine experience in securitization, derivatives, real estate, bankruptcy and distressed asset dispositions to provide legal and business guidance, as well as market insight, to clients that focus on structured debt opportunities. Further, we can often expedite clients’ ventures by drawing on their network of relationships with institutional lenders, servicers and special servicers, underwriters, investors, insurers and funds, as well as real estate owners and operators.
We have the resources and experience to deliver a full range of advice to help clients respond effectively to distressed structured loans. Because of our familiarity with complex, high-stress workout situations coupled with an understanding of deal structure and strategies for investors and sellers of distressed structured assets, we are able to provide clients with comprehensive and innovative solutions in this evolving environment.
Distressed Loan and Asset Sales
Our group has extensive experience in the purchase and sale of commercial loans, participation interests and assets securing loans. We prepare the loan sale agreements, perform due diligence, negotiate the terms of the sale agreements and consummate a closing such that our clients’ loans are sold to third parties. In addition, we represent purchasers of such loans. In that regard, we perform the same functions but with an emphasis on the due diligence regarding the loans documents and the collateral to insure that our clients are receiving what they contemplated receiving, both in terms of documentation, perfection of liens and collateral.
We have represented numerous entities in bankruptcy that have sold their assets through a Section 363 sale process, which allows debtors to sell assets free and clear of liens and encumbrances. We have also represented numerous purchasers of such assets. In these instances, we add value to the transaction by not only negotiating the asset purchase agreement and drafting and reviewing all of the relevant transaction documents, but also reviewing the pleadings filed in the bankruptcy proceedings. This may include court orders approving the sale and bidding procedures, to insure that our client understands the process, considers all contingencies and has the best possible opportunity to be the successful bidder at an auction sale.
Bankruptcy – Creditor Representations
Our lawyers have substantial experience in advising secured and unsecured creditors and Creditors Committees seeking to enforce their rights and protect their claims in bankruptcy proceedings as well as out-of-court restructurings and liquidations. We help secured and unsecured creditors file and recover their claims in the bankruptcy proceedings. We also help secured creditors protect their collateral from a diminution in value or waste, and/or obtain relief from the automatic stay in order to exercise their rights and remedies by foreclosing on, or taking possession of, their collateral. We also monitor the progress of the bankruptcy proceedings to advise our clients if any proposed plan of reorganization, or other relief sought during the bankruptcy proceeding, might adversely affect their claim, collateral or rights and help them take appropriate action to mitigate such risks.
Our group also represents shopping center/mall owners, property receivers and other landowners in bankruptcy cases filed by national and regional retail tenants. We protect their client-landlord’s rights during the tenant’s bankruptcy proceeding. This includes, moving to compel payment of post-petition administrative rent or to obtain relief from the automatic bankruptcy stay to evict the tenant; objecting to motions to extend the time to assume or reject leases, or to assume and assign leases and proposed cure amounts; objecting to store closing, going out of business or lease assumption/rejection procedures motions; objecting to motions to sell assets and assume and assign related leases; or filing proofs of claim for landlords to recover lease rejection damage claims.
To the extent that the debtor, or a trustee appointed to represent the estate of a bankrupt entity, seeks to sell assets that serve as collateral for our client’s claims, we participate in that process on behalf of our clients by either objecting to the sale or making sure that the terms of the sale are satisfactory to our clients. We help ensure the price is satisfactory, that our clients receive all of the net proceeds to which they are entitled and that any administrative expenses incurred in connection with the disposition of the collateral are minimal and reasonable to our clients.
Bankruptcy – Debtor Representations
Our lawyers have substantial experience in advising distressed businesses from a broad array of industries as they evaluate their options, including Chapter 11 reorganization, Chapter 7 liquidation and out-of-court workouts. As businesses face difficult decisions, the Bankruptcy Code provides opportunities to obtain a breathing spell from pending litigation, restructure existing financial obligations and seek relief from burdensome contracts and leases.
We guide clients through the bankruptcy planning and filing process and provide assistance with selling their business or assets in bankruptcy, addressing employment-related issues, bringing avoidance actions or other litigation or accomplishing an orderly wind-down. We also help distressed businesses explore alternatives to bankruptcy, including negotiating loan modification and forbearance agreements with their secured and unsecured creditors and implementing orderly out-of-court workouts.
Bankruptcy – Insurer Representations
Our group represents numerous insurance companies in many complex bankruptcy cases filed in various courts throughout the country by policy-holders facing asbestos, environmental and other mass tort liabilities. In such cases, we protect the clients’ rights under their policies, related agreements, settlement agreements and collateral through plan objections, prosecution and defense of adversary proceedings, filing claims and motions for payment of premiums and other post-petition insurance obligations and, where appropriate, post-petition settlements.
Bankruptcy – Avoidance and Other Litigation
Our group regularly represents defendants in preferential transfer and fraudulent conveyance avoidance actions, breach of fiduciary duty, filed by debtors or trustees in Chapter 7 or 11 bankruptcy cases. We provide a cost-effective defense of these claims, whether the amounts at issue are relatively small or substantial. Our lawyers aggressively defend avoidance claims by seeking to have them dismissed or favorably settled based upon a variety of defenses. For example, we often can assert the ordinary course of business, subsequent new value and other defenses to eliminate or reduce liability for a preference claim. We also have resolved many avoidance claims through mediation.
In addition to avoidance actions, we regularly defend former directors and officers of companies in bankruptcy against allegations of negligence, fraud and breach of fiduciary duty. We also frequently defend lenders, suppliers, vendors and other creditors in adversary proceedings relating to breach of contract, property turnover and other claims.
Bankruptcy – Representation of Trustees
Members of our group regularly represent bankruptcy trustees, financial advisors, the trustees of liquidating trusts and other professionals in bankruptcy cases. We routinely obtain the appointment of professionals, represent them during the proceedings, prepare fee applications, resolve disputes regarding the payment of their fees, and negotiate litigation and liquidating trust agreements on their behalf. We have prosecuted preference and other avoidance actions and resolved claims objections on behalf of bankruptcy trustees to maximize the recoveries of unsecured creditors.
- Committee of Unsecured Creditors, Phoenix Payment Systems, Inc., U.S. Bankruptcy Court, District of Delaware, 2014
- Represented senior mezzanine lender group in sale of the group’s $300 million debt position in the capital structure that financed the $5.4 billion acquisition by Tishman Speyer and Blackrock Realty of Stuyvesant Town – Peter Cooper Village, an 80-acre apartment complex located in the Lower East side of Manhattan
- Represented a large commercial lender in liquidating its defaulted multi-family real estate portfolio through foreclosure, note sales and deed-in-lieu transactions
- Represented Chapter 11 debtor which sold substantially all its assets to its secured creditor who is also an owner of the debtor with a small carve-out provision for unsecured creditors and administrative expenses
- Served as Delaware counsel for the administrative agent on a $325 million revolving credit facility for the debtors in the WCI Communities, Inc. Chapter 11 bankruptcy, and the pre-petition lender in connection with its $75 million term loan with the WCI debtors
- Represented computer-based simulation training company as debtor in Chapter 11 proceedings in Eastern District of Pennsylvania; successfully transferred venue of breach of contract litigation from Connecticut to Bankruptcy Court, extended automatic stay protection to debtor’s principal and rejected burdensome office space lease
- Represented investment funds in multi-party, multi-tranche workout and liquidation relating to $5 billion of class “A” office properties
- Represented the trustee in the formation of a litigation trust to prosecute and distribute the proceeds of malpractice litigation arising from a failed Gulf-Coast condominium project