X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Left to right: Andrew Kassner and Joseph Argentina , Drinker Biddle & ReathLeft to right: Andrew Kassner and Joseph Argentina , Drinker Biddle & Reath ()

Over the years, the real estate ­industry relied heavily on securitization vehicles to finance commercial real estate projects. The loans are ­packaged and then sold in pools to investors. Various mechanisms have been developed to ­facilitate collection of the loans without the uncertainty of a borrower bankruptcy filing that could delay and increase the costs of collection. Lenders in these secured transactions often use special purpose entities, or SPEs, to attempt to limit the risk of a borrower bankruptcy filing. While these structures can vary, the concept is to create a separate corporate entity whose only ­purpose and asset is the one real estate project, and the only significant obligation is the mortgage loan. The SPE is isolated from the financial affairs of the corporate parent or affiliates. The lender requires the borrower to appoint an independent director to the board from a mutually acceptable source, and unanimous board approval for certain key decisions, such as the decision to file for bankruptcy. Consequently, a lender is able to reduce the risk of delay after default and high costs of collection, and the ­borrower benefits from lower interest rates and fees from the lower cost loan.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at customercare@alm.com

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.