Rebecca Eschen discusses why deed-in-a-box transactions are particularly well-suited for the COVID-era economic instability.More
The COVID-19 pandemic has caused unprecedented disruption throughout the real estate industry, and Cozen O’Connor is uniquely prepared to handle this challenge for clients facing real estate projects in distress. Our distressed real estate team comprises an interdisciplinary group of professionals who bring to the table deep experience honed through the last financial crisis. We work with developers, investors, banks, non-bank lenders, construction companies, landlords, tenants, owners, and operators to address distressed assets head-on.
Whether our clients need the assistance of our Public Strategies Group to guide them through the complexity of federal, state, and local government regulations and relief programs, including the massive federal stimulus package; our real estate transactional group to negotiate workouts and restructuring agreements with their lenders, investors, landlords and tenants, and other contract parties; our commercial litigation practice to handle dispute resolution; our bankruptcy group to advise on debtors’ and creditors’ rights; or our tax practice to address the tax implications of these actions, Cozen O’Connor takes a holistic approach to address and respond to these issues under one roof.
A developer facing insolvency, an owner with phantom income from distressed real estate, and the signatories to an untenable commercial mortgage-backed securities contract are just a few examples of clients for whom an excellent outcome demands close collaboration among senior members of various disciplines. Cozen O’Connor has created internal systems and incentive structures that enable attorneys from various disciplines to come together quickly on an as-needed basis to achieve results.
Managing Difficult Transactional Matters
Since social distancing mandates and business closures began sweeping the country, Cozen O’Connor real estate transactional attorneys have been on the frontlines with clients, providing advice and counsel regarding the first steps in what will, no doubt, be a long road to recovery. Our real estate attorneys communicate with all stakeholders with respect to each real estate asset, whether the goal is to stave off enforcement action by a lender, preserve a lender’s rights, manage the fallout of shuttered hospitality assets, and/or to counsel landlords whose tenants are in crisis. As in any crisis of this magnitude, there is no one solution for every asset. Clients must take into account every aspect of the matter, from a party’s obligations under its lending facility that may be impacted by a waiver, to the force majeure provisions under a lease or construction contract. In each case, an experienced Cozen O’Connor professional is available to quickly get up to speed on a network of interlocking complex documentation.
We have decades of experience negotiating foreclosures, loan workouts, complex lease and joint venture restructurings, bankruptcies, and partnership disputes with respect to every category of real estate, including office, industrial, commercial, and residential assets.
Handling Litigation in Times of Crisis
Cozen O’Connor’s real estate litigators have decades of experience in handling real estate foreclosure litigation, workouts, lease interruptions, insolvency matters, and construction disputes arising from distressed real estate assets of all types, including office buildings, industrial, retail, hospitality and resort properties, multifamily residential buildings, and undeveloped land. We represent lenders, borrowers, REITs, investors, landlords, sellers, purchasers, commercial and investment banks, private equity funds, developers, and construction companies.
Our real estate litigators work closely with the firm’s top-rated real estate, corporate, and bankruptcy teams to advise on the litigation aspects of out-of-court workouts and other restructurings, foreclosures, and other issues arising out of distressed real estate assets. When appropriate, Cozen O’Connor’s real estate litigation team, with its extensive experience in successfully litigating and trying cases that arise out of these matters are prepared for aggressive litigation, trials, and appeals in both state and federal courts as well as federal bankruptcy courts. Our litigators understand that one size does not fit all, and creatively structure cost-effective approaches tailored to the particular distressed real property issue.
Providing Guidance to Clients Facing Bankruptcy, Insolvency, or Restructuring
The firm’s Bankruptcy, Insolvency & Restructuring Group has many years of experience in representing a broad range of parties-in-interest confronted with distressed real estate situations both inside and outside of formal bankruptcy proceedings. Cozen O’Connor’s bankruptcy attorneys provide representation involving distressed real estate in jurisdictions across the country; however, with numerous members of the bankruptcy team admitted to practice in Delaware and New York, we are uniquely well-suited to efficiently handle matters in the two primary bankruptcy courts for distressed real estate matters — the District of Delaware and the Southern District of New York.
The bankruptcy team regularly represents debtors/borrowers, creditors, creditors’ committees, and trustees in insolvency matters involving distressed real estate, including in the hospitality, health care, commercial, and residential segments of the real estate market. These representations include negotiating and documenting loan workouts for owners/developers and acquisition agreements for third-party purchasers of distressed properties pursuant to section 363 sales and/or Chapter 11 plans of reorganization. In connection with formal bankruptcy proceedings, our representative matters also include automatic stay proceedings; lease assumption/rejection disputes; assertion of claims for payment of rent (administrative, pre-petition, and lease rejection damages); and negotiation of settlement agreements resolving disputed issues between landlords and debtor-tenants.
In connection with the COVID-19 pandemic, the bankruptcy team has increasingly been involved in prophylactically advising clients on exactly how the potential future bankruptcy of property owners, landlords and tenants (prime and sub), guarantors, franchisor/franchisees, and other parties-in-interest would affect complex real estate financings, and how to structure or restructure contemplated financings to address bankruptcy related risks to enable our clients to best protect their interests.