Lenders in today’s market are under severe stress from rising defaults, distressed portfolios and problem credits of all types. Attorneys in the Creditors Rights, Loan Enforcement and Creditor Bankruptcy Representation Law group have assisted numerous lenders with creative remedies that help lenders maximize their recoveries.
As one of the largest and most experienced creditors rights group in the Midwest, we offer our clients the highest level of knowledge and most comprehensive set of creative solutions for their troubled loans. In addition, we communicate with our clients in an efficient and effective way through AMS extranets, which allow us to provide them with reports and the ability to upload documents and information in a safe and secure environment.
Several of the attorneys in our group have more than 20 years of experience each in the enforcement of loans and creditor remedies. The group brings its extensive national experience in the representation of lender clients on troubled and defaulted loan matters, including:
- Extraordinary remedies, including prejudgment attachment, injunctions, replevins and receiverships
- Uniform Commercial Code enforcement, including Article 9 sales, voluntary surrender of collateral transactions, and direct collection of accounts receivable
- Enforcement of rights, of mezzanine lenders, including foreclosure of equity interests and multi-party workouts
- Real estate remedies including direct collection from tenants, receivership actions, receivers' sales, trustees' sales, and mortgage foreclosure actions
- Commercial debt collection litigation and related defense of lender liability claims, including securities fraud, ECOA, RICO and Anti-Tying claims
- Priority litigation with other lienholders, including secured creditors, taxing authorities, reclamation claimants, mechanic's lien claimants, and landlords
- Extensive experience in California and other states with one-form-of-action rules and similar potential pitfalls for lenders
- Advice and litigation concerning environmental liability issues
- Loan workouts and restructures, including sophisticated documentation of multiple asset deals and use of lockbox arrangements and bankruptcy-remote and bankruptcy-deterrent structures and contract provisions
- Pre-packaged and pre-negotiated bankruptcy strategies
- Creditor plans of reorganization
- Representation of secured creditors in contested bankruptcy proceedings, including stay relief, valuation, confirmation, preference, fraudulent transfer, and other bankruptcy litigation
- Pursuit of recipients of fraudulent transfers and other avoidable transfers, and, in addition, defense of fraudulent transfer, preference, and other avoidance litigation
- Defense of breach of fiduciary duty and breach of good faith claims, as well as other lender liability claims
- Representation of holders of, and servicers for, securitized loans, particularly in connection with enforcement of prepayment and yield maintenance provisions, and in connection with validity of ""bankruptcy remote"" entities
- Representation of both lead lenders and participants in intra-lending disputes
- Representation of loan servicers in connection with ensuring compliance with PSA provisions, loan servicing standards, tax laws applicable to real estate mortgage investment conduits, and obligations under participation and co-lending arrangements
Enforcement of Real Estate Loans
The creditors’ rights group not only protects lenders' rights by drafting loan documents that afford such lenders maximum rights and remedies, but by enforcing those rights and remedies as well. Members of the group have represented secured creditors and enforced their rights from New York to Los Angeles, and from Miami to Seattle - and in hundreds of cities in between.
Enforcement of Yield Maintenance and Prepayment Provisions
Members of the group have engaged in extensive litigation regarding the enforceability of yield maintenance provisions on a national basis as well. This representation has included litigation in Chapter 11 as well as outside of it, on behalf of lenders holding both securitized and non-securitized loans. The group also represented a prevailing lender on the issue of enforceability of prepayment consideration in a case of first impression in the United States, involving the ability to recover prepayment consideration from the U.S. government after it had instituted criminal forfeiture proceedings against certain real property that secured debt owed to the secured lender. The case is subject to a written opinion by the U.S. Court of Appeals for the Sixth Circuit and is also the subject of a published article written by members of the group.
Bankruptcy Litigation and Matters
Members of the group are particularly experienced in the area of bankruptcy litigation, having represented not just secured creditors in the bankruptcy arena, but unsecured creditors committees, bondholders committees and commercial lessors, among others. Again, the group’s experience is both local and national, with members being involved in cases in bankruptcy courts in Florida, Virginia, Maryland, Pennsylvania, New York, Texas, Iowa, Colorado, Arizona, California, Rhode Island, North Carolina, Georgia, Indiana, Kansas, Illinois, Iowa, Missouri and Delaware.
The group members are experienced in the representation of lenders in all aspects of Chapter 11 bankruptcy, having litigated and negotiated issues involving stay relief, cash collateral, postpetition lending, adequate protection, executory contracts, leases of both real and personal property, preferences, fraudulent transfers, setoff and plan confirmation.
Commercial Debt Collection Litigation and Defense of Lender Liability Claims
The group’s members are highly experienced in suing borrowers, guarantors and other obligors of commercial indebtedness and have an extraordinary rate of success in obtaining summary judgments in such cases. The group also has years of experience in defending against lender liability claims and in defending claims brought under the Equal Credit Opportunity Act, under the federal Anti-Tying Act, and under the Fair Debt Collection Practices Act, as well as other claims asserted by obligors seeking to evade their payment obligations.
Enforcement of Extraordinary Remedies
Attorneys in the group have routinely represented secured lenders in replevin actions, actions for injunctive relief, and actions seeking the appointment of a receiver. Not only have the group members been successful in prosecuting such extraordinary remedies on behalf of their clients, they have also found buyers for real properties securing debt and obtained court authority for the receivers they have had appointed to sell such properties directly out of receivership. This has resulted in arms-length transactions conducted at market terms, avoiding foreclosures and trustee's sales that often amount to no more than "fire sales." This strategy has also allowed lenders to avoid having to take title to assets that may have environmental deficiencies, assets that may be heavily regulated and thus difficult to own even for a short time (nursing homes), and assets that may trigger adverse tax consequences for securitized lenders (hotels and other properties that produce profits that are not considered to be rents).
Loan Workouts and Restructures
Of course, victory in litigation is not always a secured lender's ultimate goal and, when appropriate, members of the Creditors’ Rights group have negotiated through the years hundreds if not thousands of loan workouts, forbearance agreements, and loan restructures, which often have enhanced the secured lender's collateral base and increased its ultimate return on the asset.
Loan Participation Litigation
For years, members of the group have represented financial institutions in litigation among participants, beginning during the spate of bank failures in the late 1980s and early 1990s when participating banks were often at odds with the Federal Deposit Insurance Corporation, which had often been appointed as receiver for failed banks that were either lead banks in participated loans or were participants in participated loans. To this day, members of the group represent financial institutions that have found themselves in conflicts with other institutions, either in their capacities as lead lenders or in their capacities as participants.
Representation of Loan Servicers
Members of the group assist loan servicers not just in enforcing the loans that they service, but also to ensure compliance with their obligations under servicing agreements, co-lender agreements and participation agreements, and to ensure compliance with applicable servicing standards, as well as assisting servicers with tax issues that apply to securitized lenders.