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Secured Lender Invokes Seldom-Used Tool to Protect Collateral in Bankruptcy
The commercial real estate market continues to struggle. Beyond record vacancy levels, generally poor market conditions, financing difficulties and other well-known issues of late, many mortgage holders realize that their properties are worth significantly less than their mortgage balance. Consequently, they are walking away from the properties or otherwise looking for a way to reduce their mortgage obligation to the property's current depressed market value, including through a Chapter 11 bankruptcy process. Ultimately, the question in that situation becomes: Who will take the loss on their balance sheet ' the lender or the borrower? Often, the loss falls on the lender, which has significant impact on the overall commercial leasing market by increasing the costs of financing that are ultimately passed on to property lessees.
On Jan. 19, 2012, however, the United States Court of Appeals for the Seventh Circuit issued an opinion, authored by Judge Richard A. Posner, representing a significant victory for undersecured lenders holding distressed real estate collateral. In that case, In re River East Plaza, LLC, No. 11-3263, — F.3d —-, 2012 U.S. App. LEXIS 1048 (7th Cir. Jan. 19, 2012), the subject property was the River East Plaza building, located near Navy Pier in downtown Chicago. Neal, Gerber & Eisenberg LLP (NGE) was lead counsel to the property owner's senior secured lender, LNV Corp., an affiliate of Beal Bank.
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Bankruptcy Sales: Finding a Diamond In the Rough
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Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.