An important component of commercial real estate mortgage lending is the requirement that a borrower be, and remain, structured as a special purpose bankruptcy remote entity, which requires, among other things, that the borrower only own the property being mortgaged to the lender. Lenders have required borrowers to implement such structures in order to reduce the likelihood that their borrowers would be put into bankruptcy as a result of the bankruptcy of the borrower’s affiliates.

Although being a special purpose bankruptcy remote entity will not prohibit a borrower itself from filing for bankruptcy, the requirement that a borrower own only a single asset (i.e., the mortgaged property) could result in the borrower being a single asset real estate debtor under bankruptcy law,[1] which may enable the lender to have an expedited process for having the automatic stay lifted. [2]