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Bankruptcy Commercial Law Litigation

Serving Two Masters: When ‘Bankruptcy Remote’ Meets Public Policy

How Lenders to BREs Can Reduce the Risk of Debtor Bankruptcy Without Compromising Public Policies

Structured financing transactions, including those pertaining to commercial real estate, make extensive use of entities formed for the specific purpose of reducing the likelihood that assets will be involved in a potential bankruptcy proceeding. Known as “bankruptcy-remote entities,” or “BREs,” these entities are subject to structures and covenants in financing documents and their own formation documents, which are designed to reduce the likelihood that the BRE will file for bankruptcy protection.

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Structured financing transactions, including those pertaining to commercial real estate, make extensive use of entities formed for the specific purpose of reducing the likelihood that assets will be involved in a potential bankruptcy proceeding. Known as “bankruptcy-remote entities,” or “BREs,” these entities are subject to structures and covenants in financing documents and their own formation documents, which are designed to reduce the likelihood that the BRE will file for bankruptcy protection.

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