Everything old is new again. As the pandemic’s impact on the real estate industry matures, lenders are becoming more reluctant to keep kicking the can down the proverbial road and are taking action to enforce their rights. The raft of litigation arising out of pandemic-induced foreclosure actions and diligence-intensive distressed deals are causing lenders and borrowers alike to carefully scrutinize their loan documentation. Methods of enforcement and potential defenses are critical.

Both mezzanine lenders contemplating foreclosure, and mezzanine borrowers considering their options, would be wise to be cognizant of and adapt their practices in response to recent New York Court decisions concerning the “commercial reasonableness” of Article 9 foreclosure sales of limited liability membership interests.

“Commercially Reasonable”

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