Commercial Mortgage Backed Securities

Big trees fall hard, and in the financial world, CMBS loans can be giants. When these loans become distressed, a workout resolution can be more challenging because of complications inherent with a CMBS loan.

Enter Dykema.

If you are faced with a situation that seems to limit your options, we provide concrete and creative solutions to correct course on defaulted CMBS credits leading to significant noteholder recovery.

Representing large CMBS special servicers throughout the United States.

Our team of attorneys has significant experience across the country pursuing remedies to maximize your recovery in state and federal court, in bankruptcy, and outside of court.

Whether you need to file a commercial foreclosure case and seek the appointment of a receiver, navigate a complex investigation and pursuit of guarantors for partial recourse or full springing recourse liability, or aggressively litigate fraudulent transfer actions, our team can help you find the right approach.

We work aggressively, and we work efficiently. Our clients count on us to expedite what can be an exasperatingly slow resolution process. We take a custom-tailored approach to each loan, working diligently to resolve issues quickly.

Our institutional knowledge, deep understanding of CMBS loan structures, and courtroom experience contribute to achieving the best possible result for the noteholder and special servicer, whether pre-litigation, during the course of litigation, post-judgment, or in bankruptcy court.

We negotiate a range of CMBS workout solutions, including:

Forbearance agreements
Deeds in lieu of foreclosure agreements
Assumption agreements
Reinstatement and bring-current agreements
Agreements involving defeasance
Discounted payoff agreements
Settlement agreements

Should the borrower or any guarantor file for bankruptcy, we will handle the bankruptcy matter, including:

Stay-relief motion practice
Fraudulent transfer litigation
Chapter 11 trustee motion practice
Adversary proceedings
Section 363 sales
Plan confirmation matters
Non-dischargeability litigation
Defense of preference liability actions
Priority disputes

We’ll identify pressure points where others may not look and help guide you toward a resolution that maximizes value, maximizes recovery, and forestalls the deterioration of the collateral.

We negotiate a range of CMBS workout solutions, including:

Forbearance agreements
Deeds in lieu of foreclosure agreements
Assumption agreements
Reinstatement and bring-current agreements
Agreements involving defeasance
Discounted payoff agreements
Settlement agreements

Should the borrower or any guarantor file for bankruptcy, we will handle the bankruptcy matter, including:

Stay-relief motion practice
Fraudulent transfer litigation
Chapter 11 trustee motion practice
Adversary proceedings
Section 363 sales
Plan confirmation matters
Non-dischargeability litigation
Defense of preference liability actions
Priority disputes

We’ll identify pressure points where others may not look and help guide you toward a resolution that maximizes value, maximizes recovery, and forestalls the deterioration of the collateral.

Contacts

Adam M. Fishkind
Member
Edward S. Weil
Member

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Practices

Litigation Real Estate Lending, Finance, and Workouts Restructuring and Bankruptcy Corporate and Finance

Industries

Financial Services Financial Products and Services Regulation Loan Workouts, Restructuring, and Bankruptcy

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Delivering Results in the Face of Serious Opposition
The Dykema team was brought in to handle three separate CMBS credits tied to three large commercial properties in three different counties all tied to a single CMBS sponsor. The team quickly identified a full recourse trigger and filed suit in each jurisdiction. Despite significant opposition and attempts to take broad-ranging written and oral discovery, the team was able to bulldoze the opposition and get to judgment of foreclosure and sale in 9 months, confirming the sales shortly thereafter and recovering from the sponsor.
Bankruptcy Doesn’t Stop the Dykema Team from Making the Noteholder Whole
On the eve of entry of an order appointing a receiver over large properties in a major metropolitan market, the borrower filed for bankruptcy protection. With the efficient and aggressive work of the Dykema team, the noteholder was successful in having a Chapter 11 trustee appointed for the borrower. Despite fights over competing plans of reorganization, the team was able to work with the trustee to facilitate a 363 sale that resulted in a fantastic recovery for the noteholder and special servicer.
Identification of Full Recourse Trigger Leads to Full Payoff
Shortly after being retained, the Dykema team identified a breach of the special purpose entity provision of the loan agreement which triggered full recourse against the borrower and guarantor. Shortly after filing suit, counsel for the borrower reached out with an offer to pay the loan off in full including payment of the yield maintenance premium and a large percentage of default interest resolving the entirety of the matter.
Restructuring of Otherwise Successful CMBS Hotel Credit Impacted by the COVID-19 Pandemic
Facilitated restructuring a credit to get an otherwise successful hotel back to performing loan status. Our team of litigators, workout attorneys, bankruptcy attorneys, and real estate attorneys were able to facilitate a transaction that netted significant recoveries to the noteholder and special servicer.
Deed in Lieu Leads to Successful Recovery for Noteholder
“Throwing the lender the keys” sounds like a simple enough task, but the practical reality is there is a significant amount of work involved in negotiating a seamless transfer of the collateral back to the lender. In one instance, we were able to negotiate a deed in lieu agreement held in escrow pending a default under a forbearance agreement. Once the borrower defaulted under the forbearance agreement, our team swiftly recorded the deed in lieu working with the real estate owned team to sell the property for top dollar.
Successful Appointment of Receiver Leads to Speedy Resolution
Now that the borrower’s ability to build a litigation war chest was cut off, we were able to use this leverage to work toward a successful resolution with the borrower.