Distressed Real Estate

Rising interest rates, disruptions in the financial markets, and a global paradigm shift in office utilization have created extreme stress in the real estate industry. Cozen O’Connor is uniquely prepared to help clients manage these challenges. Our Distressed Real Estate team comprises an interdisciplinary group of lawyers and government relations professionals who bring to the table deep experience in all aspects of distressed real estate. We frequently negotiate workout arrangements with lenders and capital partners; creatively restructure transactions in the face of rapidly changing market conditions; litigate when agreements cannot be reached; commence or defend foreclosure, guaranty, and bankruptcy actions when necessary; and arrange sales and rescue capital when possible.

When a project is in distress, it is important to have a strong, nimble, and diverse team that can work closely with clients to determine and implement the most effective strategies, marshalling all available facts and legal options. Our clients include developers, investors, banks, non-bank lenders, construction companies, landlords, tenants, owners, and operators.

Cozen O’Connor’s Distressed Real Estate team stands ready to provide clients with expedited but thorough assessments and to work effectively as a unit to achieve results. Whether our clients need the assistance of Cozen O’Connor Public Strategies to guide them through the complexity of federal, state, and local government regulations; our Real Estate Finance Group to negotiate workouts and restructuring agreements between lenders, borrowers, investors, landlords, and tenants; our Commercial Litigation Group to handle all manners of dispute resolution; our Bankruptcy, Insolvency & Restructuring Group to advise on debtors’ and creditors’ rights; our Tax Group to address the tax implications of these actions; or some mixture of some or all of these, Cozen O’Connor takes a holistic approach to address and respond to these issues under one roof. A lender structuring a forbearance arrangement with a “deed in a box” as additional security, an owner facing significant office vacancies, ground landlords and tenants facing complex and untenable rent resets in current market conditions, a distressed loan fund looking for opportunities, parties seeking to mitigate 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.

Managing Difficult Transactional Matters

Cozen O'Connor’s real estate transactional practice is nationally recognized and handles a large volume of complicated deals involving all asset classes from the perspective of a purchaser, borrower, lender, investor, landlord, tenant, hotel operator, and developer. Our clients range from family offices to publicly traded companies and everything in between. This enormous breadth of experience is invaluable when called to assist with the workout of a troubled asset. Our deep understanding of the lending industry gives us a clear-eyed perspective on a borrower’s negotiating position — and this perspective is relevant whether we are called upon to assist a lender, borrower, or investor. Similarly, due to our decades of experience representing developers, we can add value when the distressed project remains unfinished. 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 interest rate risk, and/or to counsel landlords whose tenants are in crisis.

Clients must take into account every aspect of the matter, from a party’s obligations under its lending facility that may be impacted by the breach of financial covenants to provisions under a joint venture agreement to a lease or construction contract that may be impacted by rising costs. 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, hospitality, industrial, commercial, and residential assets.

Handling Litigation in Times of Crisis

Cozen O’Connor’s real estate litigators have decades of experience in handling all types of distressed asset litigation, including foreclosure litigation, workouts, insolvency matters, construction disputes, and landlord-tenant litigation (including commercial and ground leases) 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 Real Estate, Corporate, and Bankruptcy, Insolvency & Restructuring 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 litigation is necessary, our real estate litigation team is uniquely qualified to litigate quickly, aggressively, and efficiently. Cozen O’Connor is a sophisticated trial firm with a national footprint that is ready to go into any court (or arbitration) in the country to vindicate its clients’ rights. Our real estate litigators have successfully litigated cases arising out of distressed real estate assets in all levels of state and federal court (including federal Bankruptcy court) and in arbitrations. Our litigators understand that one size does not fit all and creatively structure cost-effective and practical approaches tailored to meet each client’s needs as appropriate for each case. While they thrive in the courtroom, our litigators are creative and thoughtful in working with clients to reach satisfactory out-of-court resolutions if that is the best result.

Providing Guidance to Clients Facing Bankruptcy, Insolvency, or Restructuring

The firm’s Bankruptcy, Insolvency & Restructuring Group has many years of experience representing a broad range of parties-in-interest confronted with distressed real estate situations both inside and outside of formal bankruptcy proceedings. Our 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.

Our attorneys regularly represent 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); negotiation of settlement agreements resolving disputed issues between landlords and debtor-tenants; and representation of a national hotel franchisor in franchise agreement disputes arising out of Section 365.

As the interest rate environment and associated credit crunch have drained easy money from the system, the bankruptcy team has increasingly been involved in 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.

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Rebecca Eschen discusses why deed-in-a-box transactions are particularly well-suited for the COVID-era economic instability.


William F. Davis

Vice Chair, Real Estate


(212) 883-4947

Michael B. de Leeuw

Vice Chair, Business Litigation


(212) 908-1331

Zachary Samton

Co-Chair, Real Estate Finance


(212) 883-4971


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