Special Assets Lawyer Blog

One of our asset-based lender clients made a loan to high-flying frozen fish purveyor located in Nevada. His clientele consisted of restaurants that catered to tourists, and his stock in trade was the frozen fish that one finds cooked up on the buffet table in many Nevada resorts. The customer was not content with the nice business he had. Like so many others, he wanted more, so he began adding a little more ice to his fish deliveries. His customers noticed and did not like it. Let's just say they handled their complaints outside of court.

Continue reading "Special Assets: The Frozen Fish Dealer Threatened to Pull the Plug, So We Sold the Loan" »

Some years ago, one of our bank clients called on us to help negotiate and restructure a loan against a boutique hotel in downtown San Francisco. The owner-operator was capable, but he was operating his hotel as if it was a block or two closer to Union Square. The Bank wanted to get tough with him, figuring that if push came to shove, it would file suit and ask for a receiver to be appointed.

Continue reading "Troubled Loans: Loans to Hotels Must Be Secured by Real and Personal Property" »

Thousands of motor vehicles dealerships will fail before the restructuring of the auto industry is over. Clients of the JMBM Special Assets Team are facing significant potential losses on loans to dealerships and property owners as these once-thriving local businesses fall on hard times, fail and close. As in every crisis, a calm, guiding hand is required to minimize loss, maximize value and perhaps, to find an opportunity to build for the future. The JMBM Special Assets Team provides experienced counsel to lenders holding troubled loans to motor vehicle dealerships and to draw on JMBM's broad expertise representing motor vehicle manufacturers, secured lenders and real estate investors to help find and preserve value.

The JMBM Special Assets Team represents clients' financial interests that are put at risk by failing vehicle, farm implement and marine dealerships. JMBM does not represent consumers, motor vehicle dealers or franchisees; instead, we provide expert guidance for:

• Manufacturers who must address the problems created by failing dealerships
• Secured lenders who must take prompt action to preserve their collateral or defend lender liability claims and class actions
• Investors who have leased sales and service facilities to dealers.

Continue reading "Special Assets Law: How do lenders, manufacturers and investors preserve value, minimize loss and repurpose shuttered motor vehicle dealerships?" »

Whether it is a solution to a problem or the response to an opportunity, the JMBM Special Assets Team of finance, real estate, bankruptcy, tax and land use lawyers mobilize quickly to address the complex issues raised by troubled loans and distressed real estate and other assets. To position our clients for the best possible outcome, we act quickly to preserve value and preserve cash flow.

Take a look at our deals and experience by clicking HERE.

This is Dick Rogan, bank lawyer and author of www.SpecialAssetsLawyer.com, signing off for now. Join us again soon to check out what's new in the World of Workouts.

Year after year, day after day, workout professionals in the know rely on JMBM's Special Assets Team to handle problem commercial and real estate loans. Whatever problem loans you have, chances are, we've seen it. Give us a call.

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Our Perspective. JMBM represents commercial banks, special servicers, private lenders, asset-based lenders, hard money lenders and factors. We help lender clients throughout the United States craft business and legal solutions to their commercial and real estate troubled loans. For more information, please contact Dick Rogan at RRogan@JMBM.com, or (415) 398-8080.

Richard A. Rogan is Chair of the JMBM Special Assets Team. He also serves as the co-managing partner of JMBM's San Francisco office and co-chair of its Bankruptcy Practice Group.

JMBM's Special Assets Team has represented hundreds of lenders in California and throughout the United States. We regularly appear in bankruptcy courts, district courts and superior courts. We are proud to serve as trusted counsel and advisors who look for a business solution and try to help lenders find the best possible resolution for each troubled loan. Whether a loan is being newly documented, restructured or litigated, JMBM's Special Assets Team has the skill, know-how and experience to solve your problem in a practical no-nonsense way.

NOTE TO CONSUMERS: As a matter of Firm policy, JMBM does not represent individual consumers who have disputes with their lenders. Many lenders have specialized consumer workout professionals who have the time to help consumer borrowers. There are many fine attorneys who specialize in representing consumers. Individuals with consumer lending problems should contact a lawyer or law firm who specializes in consumer insolvency and bankruptcy in their local area. When in doubt, we suggest you contact your local bar association's Lawyer Referral Service. [For example, see Bar Association of SF or LA County Bar Association Lawyer Referral Services]

JMBM does not provide legal advice to consumers, and cannot respond to consumer inquiries.

An asset-based lender must be prepared to sell the collateral to get the loan repaid. Often, the collateral is sold at auction, and it is essential that the lender be able to give access to the auctioneer and give the auctioneer plenty of time to set up and advertise the auction.

Borrowers often operate out of leased premises, so if the borrower goes out of business or files bankruptcy, it falls on the lender to deal with the borrower's landlord. Like the lender, the landlord probably has not been paid and is going to try to get the lender to cure the borrower's default. Faced with a recalcitrant landlord, a lender can find its costs rising dramatically as it debates the Hobson's choice between paying off the landlord and going to Court to gain access to its collateral.

Most asset-based lenders try to anticipate this standoff at the outset, when borrower, landlord and lender all are optimistic and willing to deal. JMBM Special Assets Team member Barry Freeman tells us why a lender ought to get a Landlord's Waiver and what terms ought to be included. Barry has a long track record representing asset-lenders and other secured lenders, as do many of us on the JMBM Special Assets Team. If you are making, restructuring or collecting asset-based loans, give us a call.

Continue reading "Problem Loans: Landlord's Waiver, a "Must" Document" »

NOTE: This article does not address foreclosure of residential real property with one to four units. Although many of the concepts described in this article apply to the foreclosure of residential real property, laws have been enacted to provide additional protections to homeowners and owners of residential property with one to four units. This article does not attempt to summarize the law that applies to residential property with one to four units.

As we have discussed in another article, under California's foreclosure law, three months must pass after recording a Notice of Default before the creditor can instruct the Trustee to sell the property. While California law requires only 20 days notice before the foreclosure sale, lenders typically instruct the foreclosure company to give 25 days notice to cut off any junior lien rights that IRS might have.

Continue reading "Credit Bidding at California Foreclosure Sales: What Foreclosing Commercial Real Estate Lenders Need to Know" »

NOTE: This article does not address foreclosure of residential real property with one to four units. Although many of the concepts described in this article apply to the foreclosure of residential real property, laws have been enacted to provide additional protections to homeowners and owners of residential property with one to four units. This article does not attempt to summarize the law that applies to residential property with one to four units.

Many of our clients are experienced bankers who know commercial real estate, but who had not been the officer assigned to loans in default - until recently. Other clients are experienced real estate workout professionals who are based outside of California and who have only heard tales of California's dreaded "one form of action" and "anti-deficiency" rules. This article discusses the basic concepts underlying foreclosure of commercial real estate in California. In this article, and in others yet to come, we will discuss practical problems that must be handled by workout professionals assigned to collect troubled commercial real estate loans in California. We'll provide tips from experts in how to approach and collect a troubled commercial real estate loan, and we'll also explain what should not be done and why.

Continue reading "Commercial Foreclosures in California: Questions to Ask and Answer Before the Lender Forecloses" »

From time to time, the JMBM Special Assets Team members make speeches, appear on panels and present webinars about topics of interest to workout professionals. These programs are a great opportunity for workout professionals to ask questions, keep up to date and to network. The Special Assets Lawyer Blog features a "Programs & Events" button that you can click at any time to find out what's happening in the near future.

About 10 years ago, one of our veteran workout professional clients realized that many bankers on his staff did not know what a receiver does, why a bank might want to have a receiver appointed and how a receivership works. He asked me to come to their offices and explain the concept of receiverships. I put together this Receivership 101 presentation for that seminar, and since then, I have presented this seminar many times in private in-house seminars we do for our clients, for the California Receivers Forum and for other professional associations.

Continue reading "Receivership 101--What you need to know now!" »

With great fanfare, the California Legislature passed a bill in 2008 that amends the State's Elder Abuse Law. Neither the legislators nor Governor Schwarzenegger must have paid much attention to this legislative travesty, given the ongoing budget crisis, because this bill is a real doozy. No one wants to see financial abuse of the elderly, certainly not the mainstream responsible banking community. The California banking community has long taken appropriate steps to spot and guard against the financial abuse of seniors and other disadvantaged persons. Most institutions have procedures in place to verify the source of questionable transfers, and most provide training to their employees to help combat financial abuse. Nevertheless, thanks to the new Elder Abuse Law, our bank clients are now being hit with nasty lawsuits accusing them of the financial abuse of elders when nothing of the sort has taken place.

Continue reading "Bank Litigation: California's New Elder Abuse Law is being Abused" »

I can't tell you how many times our client has successfully collected its loan out of the proceeds from a sale of the borrower's assets in a bankruptcy case. When a sale of assets occurs in bankruptcy outside of a Plan of Reorganization, it must meet the five part test set forth under Bankruptcy Code Section 363(f). Often, these sales are called "363 Sales." In 2008, the Ninth Circuit Bankruptcy Appellate Panel issued a significant ruling that effects Section 363 Sales. The key take away from this ruling is that even if the Bank is fully secured by the assets being sold, the sale - outside of a Plan of Reorganization - will not be approved unless the junior secured creditors are also paid in full or consent to the sale. This ruling deals a stunning blow to liquidating assets in Bankruptcy in the current marketplace, where the Bank's collateral has dropped in value in a meaningful way and junior creditors are out of the money.

My colleague, Walter Gouldsbury, a member of the JMBM Special Assets Team, puts the Clear Channel opinion in perspective and in doing so, gives workout professionals a quick and easy place to go to understand the rules that govern Section 363 Sales.

Continue reading "Bankruptcy: Section 363 Sales Must be Free & Clear of Liens in Bankruptcy" »

Companies frequently file Chapter 11 cases because their cash flow is insufficient to finance operations and debt service. The idea is to take advantage of the automatic stay to hold off existing creditors during the time it takes to restructure the Debtor's obligations by a Plan of Reorganization. Debtors hope that by minimizing cash outflows to creditors, they can concentrate on "fixing" the business or leasing up the property to increase revenues.

But who will provide the necessary cash flow to bridge the gap between the filing of the Chapter 11 case and the confirmation of the Plan? Often, the Debtor's business is incapable of generating sufficient cash at the outset. When that happens, Debtors seek to obtain an order of the Bankruptcy Court under Section 364 to allow post-petition borrowing, or as it is commonly known, "DIP Financing." The acronym "DIP" stands for "Debtor in possession" and refers to the company that filed the Chapter 11 case.

Continue reading "Debtor in Possession Financing--Financing a Debtor after a Chapter 11 Filing" »

From time to time, I've been asked to give in-house seminars for our lender clients about the mission of the Special Assets Department. The goal is to help relationship officers and workout professionals work together for the benefit of the institution. Many line officers are terrific are generating new business and at serving the good customers of the bank, but when a customer suffers a financial setback, the line officer may be faced with a problem he or she has not seen before and may not know where to turn for guidance. We've found that putting lenders and workout professionals together in a relaxed seminar setting generates terrific give and take and results in a camaraderie that works for the benefit of the bank.

Over the years, I've developed this PowerPoint presentation that outlines what a vibrant positive Special Assets Department can do for a lender. This brief outline shows how workout professionals play a positive role in operating and growing the bank, highlights the interplay with credit administration, legal and bank management and focuses on the mindset that is necessary to maximize value and minimize loss.

The JMBM Special Assets Team works closely with workout professionals on a daily basis. We understand the need to establish realistic goals and thoughtful action plans and to take the steps that are necessary to achieve the best possible result in a difficult situation. We put these time-honored principles to work in representing our lender clients deal with troubled credits. Give us a call when you are faced with a problem credit that requires legal counsel who knows the ropes and can get the job done.

Continue reading "Special Assets: Tricks of the Trade" »

TIP: When doing a workout, develop a strategy for collecting the loan. Are the prospects of collection improved if the debtor continues to operate? Or, do you minimize the risk of collection by liquidating the debtor?

These ten points should be considered as you develop your workout strategy:

Continue reading "Commercial Loan Workouts: 10 Points to Developing A Loan Workout Strategy" »

Welcome to SpecialAssetsLawyer.com, a place where problem loans and troubled debts are the topic of discussion. I am Dick Rogan, bank lawyer and chair of the JMBM Special Assets Team. Every day, problem loans of all types cross my desk and the desks of my colleagues here at JMBM. That's because we ask for them. Our clients are banks, special servicers, private lenders and others dealing with the fallout from the "Great Lending Bubble." Our clients challenge us to help them find value where all appears to have been lost. They rely on our collective years of experience to develop the right approach for each loan. Let's face it, our task is to work with our clients to make the most out of a bad situation.

Over the years, we've been asked by young people just joining a lender's workout team and by experienced lenders who have crossed over to the "dark side" of the bank to explain the tricks of the trade in dealing with special assets. In response, we created SpecialAssetsLawyer.com - a collection of some of our accumulated wisdom and a place for bank workout professionals to come find out what works when attempting to collect and deal with problem loans.

Continue reading "Special Assets Lawyer.com: A Place Where Problem Loans and Troubled Debts Are The Topic of Discussion" »