Contractual Risk Transfer: Your Policy or Mine?
September 27, 2007
Companies involved in collaborative undertakings frequently confront risk sharing and transfer issues. After they identify a project's hazards, they then decide who will bear what risk, in what way, and in what amounts. They also need to consider whether either party (or both) will maintain insurance for the other's benefit. When negotiating a contractual risk transfer agreement, the parties need to understand their bargaining position and relevant contract and insurance principles. They need to be cognizant of risk transfer limitations. They need to consider if the risk transfer will be supported by insurance, and if so, the scope of coverage required and their willingness to share it in the event of a loss. The companies also need to put in place measures to assure compliance with their contract. This article examines these matters and offers practice pointers for those confronting contractual risk transfer decisions.
Green Issues in Commercial Office Leases
September 26, 2007
The first part of this series focused on the credits involved with a lease for office space where the client wants to pursue LEED CI Certification and addressed the LEED CI credits one needs to be aware of, by category, with a discussion of the intent behind each credit. The conclusion discusses the questions that should be asked of the tenant and landlord.
The Leasing Hotline
September 26, 2007
Highlights of the latest commercial leasing cases from around the country.
Green Revolution: New Local Regulations Address Global Warming
September 26, 2007
A great deal has been written about global warming, international efforts to cut greenhouse gas emissions, state and federal action in this area, and even growing business initiatives that seek to address the problem. (<i>See, e.g.,</i> Thomas L. Friedman, 'The Green Road Less Traveled,' <i>N.Y. Times, Week in Review,</i> at 12, July 15, 2007. Significantly, however, these environmental concerns also have reached down to the local level throughout New York state. Indeed, local government actions are already affecting ' and will have significant future implications for ' individuals, businesses, property owners, contractors, and suppliers. Local municipalities have adopted zoning, building, or construction codes or other land use regulations requiring consideration of greenhouse gases or related environmental issues before permits will be issued. The new provisions are becoming so prevalent, in fact, that one might rightly declare that the state is at the beginning of a 'Green Revolution' on the local level.
In the Spotlight: Renovation of Existing Buildings
September 26, 2007
As commercial landlords in cities nationwide continue to look toward renovating or converting their commercial properties to other uses, and in particular into residential condominiums, many do not fully consider the dynamics between the existing tenants and the conversion process, which can result in decreased profits for the entire conversion or renovation project. Often, the interests of the existing tenants and renovating landlords are irreconcilably adverse to each other. Any landlord that fails to consider the 'cross-purpose dynamics' between the existing tenant's interests and its own interests in renovating or converting the property places itself in a common trap. Unsuspecting landlords that may think they are undertaking a simple and profitable conversion find that the renovation process can prove costly and fraught with contentiousness and hostility. Careful consideration of a few key issues can help landlords be sensitive to and avoid problems that arise from the cross-purpose dynamics inherent in many commercial renovations.
Self-Help and Set-Off Rights: A Primer
September 26, 2007
'Rent is an independent covenant.' These are words historically coveted by nearly every landlord. In most cases, interestingly, the independent nature of the payment of rent is not troubling to tenants or their counsel. In some jurisdictions, the concept of 'dependant covenants' is surfacing if the parties do not specify otherwise. From time to time, however, a tenant will require the landlord to insert provisions providing the right to self-help and/or the ability to set-off against rent, concepts that are contrary to the independent covenant doctrine. For well-heeled landlords, this is problem enough. Add a lender to the mix, particularly in instances where consent to the lease is required, and the matter quickly becomes complicated. The landlord's interests lie in keeping others from acting on its behalf with respect to its property and preserving its cash flow. The tenant's interests lie in making sure that the landlord performs its obligations under the lease and, if the tenant is required to act for the landlord, that the tenant has a source of funds to reimburse it for doing so. Finally, lenders are most interested in stable cash flow, continued loan repayment, and the avoidance of disputes to which they may become a party.
Exploring the Outer Limits of ' 363(f) Clearance
September 26, 2007
Bankruptcy offers an attractive platform for the sale of assets because it is injected with a statutory prerogative allowing for the clearance of third- party interests. Specifically, ' 363(f) of the Bankruptcy Code permits the sale of bankruptcy estate property 'free and clear of any interest [of any other entity] in such property' provided that certain conditions are satisfied. Notwithstanding that grant of authority, however, the Bankruptcy Code does not specifically define the phrase 'any interest in such property' or otherwise specify the scope of interests that the phrase is intended to cover.
Riding the Fulcrum Seesaw
September 26, 2007
Troubled businesses also may have turned to the distressed debt market instead of filing for bankruptcy protection due to recent changes to the Bankruptcy Code, which made bankruptcy a more complicated, expensive and uncertain alternative. As a result, when the next wave of Chapter 11 filings comes, hedge funds and other distressed debt investors will act to protect their unique interests and strategies, which will bring new dynamics to bankruptcy cases.
