Due to the historically rapid increase in interest rates over the past eighteen months, among other factors, many owners of commercial property, particularly in the office market, are struggling. Particularly hard hit are higher leveraged properties, where the debt stack often includes mezzanine debt.
Since mezzanine loans carry higher interest rates and are subordinate to mortgage loans, they are often the canary in the coal mine feeling the impacts of financial distress first. In this session, we will provide an overview of the processes for distressed mezzanine loan work-outs and enforcement actions, and will highlight the key legal and business issues that often arise in a distressed mezzanine loan situation and potential strategies for the favorable resolution of those issues from both the borrower and lender perspectives. Specific topics to be covered include:
• Brief Overview of Mezzanine Loan Structure – Setting the Table for Discussion
• Mezzanine Borrower Defaults
• First Steps
• 1. Mezzanine Lender
• 2. Mezzanine Borrower
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Mezzanine Loan Work-outs: modifications, A/B Notes, Conversion to Preferred Equity, Mortgage Loan Purchase
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Consensual Alternatives to UCC Sale: Retention of Collateral in full/partial satisfaction of debt, assignment in lieu of sale
• UCC Sale
• Attacking the Sale
• Post Sale Issues