Thousands of these “single-asset real estate cases” were filed involving real estate with values substantially less than the mortgage, few other non-insider creditors, and few or no employees. These “reorganizations” were about investment partnerships that owned only one asset — the project — attempting to force the mortgage lender to stay in the deal for years to come on the hope the market would recover and the debtor could convince the court to allow the mortgage loan debt to be reduced substantially over the lender’s objection and investors reap the upside later.
These acrobatic attempts usually failed, but the body of law created in the process was substantial. Even the U.S. Supreme Court issued a significant single-asset real estate case decision. In fact, Congress later amended the Bankruptcy Code to include specific provisions regarding single-asset real estate cases.
