Bankruptcy & Restructuring
August 29, 2013
[statement]“Our client’s mortgage lender, as well as a group of unpaid contractors, were ready to foreclose, which would have forced the closure of an affiliated hotel built on that property and imperiled our client’s only chance to satisfy millions in debt.” – Patrick T. Collins, Partner[/statement]
A real estate development company filed for Chapter 11 bankruptcy, owing millions to its mortgage lender, unpaid contractors and taxing authorities. The mortgage lender and unpaid contractors were seeking to foreclose and evict an affiliated luxury hotel that leased the 22-acre waterfront property on which the mortgage was held.
“Helping this client restructure their debt was particularly challenging not only because so many different constituencies were involved, but also because we were faced with a lender that initially insisted it would take nothing less than full payment of the money owed,” explained Patrick T. Collins, a partner in the Farrell Fritz Bankruptcy and Restructuring Group. Collins, together with Ted A. Berkowitz and Louis A. Scarcella, led the case’s multidisciplinary reorganization team that also featured attorneys from the firm’s Real Estate, Corporate & Finance and Tax groups.
“We were able to convince the lender and the committee of unsecured creditors that the continuous operation of the hotel, which was our client’s only revenue stream, was the key to our client being able to satisfy its debt,” he noted. As a result of Farrell Fritz’s negotiations, the developer was able to maintain control of the hotel – and continue its operation without interruption – throughout the 13-month process. The bankruptcy case concluded with a federal bankruptcy judge approving a consensual reorganization plan which enabled the developer to emerge from bankruptcy and restructure its debts to the mortgage lender and contractors.
“A complex and multifaceted case like this one requires creative thinking by knowledgeable lawyers who are known and well-respected by their opposing counsel – Farrell Fritz brought the right team to the table for this client from the start,” Collins concluded.