Law.com Subscribers SAVE 30%
Call 855-808-4530 or email GroupSales@alm.com to receive your discount on a new subscription.
Converting Debt to Equity: An Alternative to Modification or Extension of Loans
The state of the office sector is grim. The end of the era of cheap money, coupled with a shift to remote work, has resulted in widespread value destruction and mounting distress. The tide of bad news is unlikely to recede any time soon. As has been widely reported, U.S. property owners must refinance $137 billion of office mortgages this year and nearly half a trillion dollars in the next four years, at a time of widespread lender retrenchment. Compounding the distress, spiking interest rates, coupled with the staggering cost of interest rate hedges for floating-rate loans, have dramatically raised the cost of the few loans on offer.
The Playbook, and the Case for Ripping It Up
When a borrower cannot repay a loan at maturity, lenders have customarily chosen between two options: modification and extension of the loan; or the exercise of the lender's remedies under the loan documents. Modification and extension agreements typically afford the borrower additional time to repay the loan, in the hope that market conditions will improve before the new maturity date. They also frequently afford the borrower additional relief, such as the right to accrue interest during the extension period, and even a promise of additional loan advances to fund tenant improvement and other costs required to reposition the asset. The exercise of remedies under the loan documents entails either judicial foreclosure or the delivery of a deed in lieu of foreclosure.
It may be time to rip up the playbook and turn to a third option. Historically, lenders have been unwilling to go into business with their borrowers, preferring to observe a rigid separation between debtor and creditor. This approach made sense in past downturns, when lenders could be confident that the market would rebound and their collateral would recover its value.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at customercare@alm.com or 877-256-2473
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?