An important decision confirming the enforceability of UCC pledges of equity interests that are routinely provided to mezzanine lenders as collateral in connection with complex commercial real estate financing transactions was recently handed down by Justice Barry R. Ostrager in HH Cincinnati Textile L.P. et al. v. Acres Capital Servicing LLC and DW Commercial Finance, LLC, No. 652871/2018, 2018 N.Y. Misc. LEXIS 2472 (Sup. Ct. June 8, 2018).

The court’s holding is highly significant. It represents the first written decision under New York law expressly confirming that when parties to complex commercial real estate financing transactions decide to include both a real property mortgage and a pledge of UCC security interests as collateral for the loan, the lender’s right to enforce its remedies pursuant to either security interest will be fully enforced.