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This article provides guidance for real estate lawyers on how to handle distressed real estate situations, whether through a workout or litigation. It emphasizes the importance of analyzing the client's objectives and conducting due diligence on the case, including reviewing documents, collateral, and parties involved. The article also discusses the need to analyze the market, state law, possible defenses, and various legal considerations such as pre-negotiation letters, nonlitigation discovery, notices of default, insurance coverage, tax liability, lender liability, and coordination with other lenders. The article concludes by discussing the different approaches for non-CMBS loans and CMBS loans.This document provides information on various aspects of loan workouts in the context of real estate mortgage investments. It explains the role of the special servicer in protecting the interests of investors, rather than borrowers. It also discusses the different types of workouts that can be pursued, such as forbearance, reinstatement, modification, lender exit, and borrower exit. The document highlights the importance of understanding the collateral status, the reasons for default, and the parties involved in order to determine the best course of action. It also explores the potential for litigation, receivership, assignments of rent, pursuit of guaranty, judgment, post-judgment proceedings, bankruptcy, and modification through a Chapter 11 plan as possible avenues for resolving loan workouts. [Extracted from the article]

The article discusses the challenges borrowers and lenders face in the current economic climate, particularly in relation to loan defaults. It explains the three types of loan defaults: payment defaults, performance defaults, and defaults of representations and warranties. The article also explores the various strategies that borrowers and lenders can employ to remediate loan defaults, such as consents, waivers, reservation of rights letters, forbearance agreements, and amendments. It emphasizes the importance of understanding the signs of distress and developing effective action plans in order to navigate economic uncertainty successfully. [Extracted from the article]

The article discusses the challenges faced by rental housing companies in the face of rising interest rates, higher insurance premiums, and decreasing property values. It highlights the need for rental property owners to build a give-and-take relationship with their bankers in order to navigate these challenges. The article suggests options such as extending, refinancing, or renegotiating loans, as well as exploring refinancing options through the U.S. Department of Housing and Urban Development. It emphasizes the importance of open communication with lenders and being proactive in addressing financial difficulties. The article also mentions the importance of recognizing and highlighting the accomplishments of the rental property in order to negotiate better loan terms. [Extracted from the article]

The article discusses the creation and success of the Connecticut Foreclosure Mediation Program, which was designed to help homeowners facing foreclosure during the mortgage crisis. The program was a collaborative effort between the Legislature, the Judicial Branch, and stakeholders from the banking industry and consumer advocates. It was funded by a $2 million appropriation from the State Banking Fund. The program's success can be attributed to factors such as the involvement of well-trained judicial employee mediators, the buy-in from all stakeholders, and regular iterations and improvements to the program. Since its establishment in 2008, the program has achieved a settlement rate of 87% and has helped thousands of homeowners stay in their homes through loan modifications, reinstatements, or repayment plans. The program's long-term success has led to discussions about implementing similar programs in other areas, such as managing post-pandemic evictions and resolving land use and zoning disputes. The article concludes with advice for those interested in starting a similar program, emphasizing the importance of mediation skills, collaboration, and problem-solving. [Extracted from the article]

Healthscope Ltd., an Australian hospital operator owned by Brookfield Asset Management, has received a covenant waiver from lenders on a A$1.6 billion ($1.1 billion) loan to allow more time for negotiations with health insurers for higher reimbursements. The waiver, granted until March 2025, aims to prevent a breach of the loan agreement as Healthscope faces challenges with lower earnings. The firm is seeking to restructure the loan due to rising medical costs and difficulties in obtaining higher fees from insurers in Australia. [Extracted from the article]

Namibia's central bank has implemented a policy to provide financial relief to the drought-affected farming industry. The plan, effective since October 23, requires lenders to offer loan restructuring, debt moratoriums, and emergency funding with favorable terms to eligible farmers and agricultural businesses. This initiative aims to alleviate the financial strain on clients and stabilize the agricultural sector in Namibia, which is currently facing its worst drought in a century, impacting the livelihoods of a significant portion of the population. [Extracted from the article]

Indonesian steelmaker PT Krakatau Steel is facing operational and industry challenges as it attempts to restructure $1.5 billion of loans. Falling revenue, competition from cheap Chinese imports, and the death of its president director are complicating the restructuring process. The company's net loss in the first half of 2024 widened, and revenue slumped due to a fire at one of its plants. These challenges are also affecting investor confidence in its unit PT Krakatau Posco. The government has offered support to boost Krakatau Steel's competitiveness, but the company needs to address its operational issues and improve sales to become healthy. [Extracted from the article]

The Indonesian government is working towards finalizing a loan restructuring agreement between PT Krakatau Steel, the nation's largest steelmaker, and its lenders. The company and its banks have been in talks about the restructuring agreement, which is expected to amount to approximately $1.5 billion. Krakatau Steel, which faced challenges from cheaper steel imports, sought government support and completed a $2 billion debt restructuring in 2020. The company's need for loan restructuring was further highlighted by a fire at one of its plants. Debt strains have also affected Indonesia's construction industry. [Extracted from the article]

Some creditors of Sino-Ocean Group Holding have expressed concerns about the company's pursuit of a restructuring tactic in UK courts. Sino-Ocean is facing a lawsuit in Hong Kong by a bondholder group seeking liquidation. The company wants to settle restructuring terms with loan creditors in Hong Kong while also utilizing an insolvency practice in the UK. The involvement of UK courts is due to the bonds being subject to laws in that country. The creditors are worried about the fairness and transparency of the restructuring plan. Sino-Ocean has proposed a plan that divides creditors into four classes, but support levels from other creditor groups are below 20%. The company declined to comment on the matter. The UK introduced changes to its insolvency laws in 2020 that allow a judge to force through a plan in the face of some creditor opposition. Sino-Ocean has a hearing scheduled in a UK court on October 18 and plans to seek an order to convene with creditors for approval of the Hong Kong portion of the restructuring process on October 31. Other Chinese real estate firms have also used London as a venue for their restructuring plans due to loose rules around the extent of business required in the UK. [Extracted from the article]

The article discusses the financial challenges that arise from high global maize yields, which can depress prices and strain producers' profitability despite initially seeming beneficial. Topics include the impact of high yields on market dynamics and bank loans, the anticipated interest rate cuts as potential financial relief, and strategies for banks to support agricultural clients through tailored solutions and proactive engagement.

The Mortgage Modifications Act is currently being drafted by the Uniform Law Commission to address the uncertainty surrounding the making and interpretation of modifications to recorded mortgages. The act aims to provide clear parameters for when and how mortgages can be modified and the implications of different types of changes. It seeks to clarify gaps in the common law and establish uniform rules for recording mortgages and determining mortgage lien priority across states. The act will permit safe harbor modifications that do not affect the priority of junior interest holders and will not require recording of modifications to retain priority. It is expected to be finalized in 2024 and could significantly benefit borrowers and prevent unnecessary foreclosures. [Extracted from the article]

The World Bank has pledged $16.6 billion in funding to Ethiopia over the next three years, providing support to the country as it restructures its debt and opens up to foreign investors. This assistance includes a $1 billion grant and a $500 million concessional loan to strengthen Ethiopia's financial sector and improve fiscal transparency. The International Monetary Fund has also agreed to a $3.4 billion bailout package for the country. Prime Minister Abiy Ahmed has implemented economic reforms since 2018 to revive Ethiopia's economy, which has been impacted by conflicts and natural disasters. The government needed an IMF program in place before resuming debt-restructuring talks under the Group of 20-backed Common Framework. [Extracted from the article]

The International Monetary Fund (IMF) has approved a $3.4 billion funding program for Ethiopia as part of an economic reform plan. This will allow Ethiopia to begin negotiations with creditors to restructure its debt. The IMF loan includes an immediate disbursement of about $1 billion. Ethiopia has a total external debt of $28.4 billion and has been seeking to restructure its loans since 2021. The country's central bank also announced that it will allow its currency, the birr, to trade freely, which paved the way for the IMF deal. The IMF program aims to address macroeconomic imbalances, restore external debt sustainability, and promote higher, inclusive, and private sector-led growth. The IMF estimates that Ethiopia's GDP will grow by 6.5% in the current fiscal year and inflation will drop from 30% to about 10% over the same period. [Extracted from the article]

Ethiopia's defaulted international bond has increased in value after the International Monetary Fund (IMF) approved a $3.4 billion loan to the country over four years. This loan is part of an economic reform program that is expected to facilitate negotiations with creditors regarding debt restructuring. The IMF funds are a portion of the $10.7 billion that Ethiopia anticipates receiving from creditors. The approval of the program by the IMF is seen as a significant moment for Ethiopia and a testament to its commitment to transformative reforms. The country's central bank also announced that it would allow its currency, the birr, to trade freely, which further paved the way for the loan. However, it remains uncertain how quickly the government will proceed with debt restructuring with bondholders. Ethiopia is the fourth country to renegotiate its debt under the Group of 20-backed common framework mechanism. The IMF program aims to address macroeconomic imbalances, restore external debt sustainability, and promote higher, inclusive, and private sector-led growth. The IMF predicts that Ethiopia's GDP will grow by 6.5% in the current fiscal year and inflation will decrease from 30% to about 10% over the same period. [Extracted from the article]

Ethiopia's central bank has allowed its currency, the birr, to trade freely in order to secure funding and debt relief from the International Monetary Fund (IMF). The move is a key reform that the IMF has been requesting as part of negotiations for $10.5 billion in funding. The strict control of the currency by the central bank has caused a shortage of dollars in the country, hindering economic recovery. The devaluation of the birr has been a sticking point in negotiations, and Ethiopia defaulted on its debt in December. The IMF board is expected to discuss Ethiopia's request for a new financing program. [Extracted from the article]

Ethiopia has allowed its currency, the birr, to trade freely in order to attract investors and secure financing from organizations like the International Monetary Fund (IMF). The move comes after the country's central bank tightly controlled the currency, leading to a shortage of dollars and hindering economic recovery. Ethiopia is currently in talks with the IMF to unlock over $10 billion in funding, which is contingent on currency reforms. The country defaulted on its debt in December and is seeking to restructure loans with bilateral creditors. [Extracted from the article]

The International Monetary Fund (IMF) is planning a board meeting next week to discuss Ethiopia's request for a new fund-supported program. The meeting is scheduled for July 29 and will focus on an extended credit facility. This scheduling is unusual as the IMF has not yet announced a staff-level agreement for Ethiopia, which typically precedes board votes on new programs or loan reviews. The IMF's approval would allow for a restructuring of Ethiopia's debt using the Group of 20's Common Framework mechanism. Ethiopian Prime Minister Abiy Ahmed has expressed hope that talks with the IMF and World Bank will unlock over $10 billion in financing in the future. [Extracted from the article]

Ethiopia has received financing assurances from its official creditors, including the Paris Club and China, to help expedite the approval of a new loan from the International Monetary Fund (IMF). These financing assurances indicate that the creditors will restructure their loans to Ethiopia in a manner consistent with the IMF's program. Ethiopia has been in discussions with the IMF for over two years regarding a new program, as its previous loan was derailed by a civil war and economic decline. The country aims to restructure its external debt using the Group of 20's Common Framework mechanism. [Extracted from the article]

Ethiopia has received financing assurances from its official creditors, including the Paris Club and China, which will help expedite the approval of a new loan from the International Monetary Fund (IMF). These financing assurances indicate that the creditors will restructure their loans to Ethiopia in a manner consistent with the IMF's program. Ethiopia has been in discussions with the IMF for over two years regarding a new program, as its previous loan was derailed by a civil war and economic decline. The country aims to restructure its external debt using the Group of 20's Common Framework mechanism, with France and China co-chairing the official creditor committee. The IMF has not yet announced a staff-level agreement for Ethiopia, but progress has been made. The Common Framework has been criticized for its slow progress, but the IMF has stated that the process is speeding up for Ethiopia. [Extracted from the article]

B. Riley Financial Inc., an investment bank, is facing challenges due to its involvement with a struggling Texas home-furnishings chain called Conn's Inc. B. Riley made a loan to Conn's in December to help them acquire a troubled rival, but the twist is that the seller was Franchise Group Inc., where B. Riley is a major shareholder. Franchise Group took stock in Conn's instead of cash, and since then, Conn's shares have significantly decreased in value. Short sellers have been betting against B. Riley, and there are concerns about the health of Franchise Group and B. Riley. However, B. Riley maintains that the loan to Conn's will be fully repaid and that they are comfortable with their position. Conn's is facing financial difficulties and is considering bankruptcy. The potential default at Conn's could have implications for Franchise Group and B. Riley. B. Riley has experience with debt workouts and bankruptcies and believes that the loan to Conn's is well-collateralized and fully secured. Franchise Group has other assets and is seeking ways to raise cash. The Stephens family, senior lenders and common stockholders of Conn's, have an incentive to keep the company afloat. The challenges faced by B. Riley are rooted in its acquisition of W.S. Badcock and the subsequent decline in sales at all three chains owned by Franchise Group. B. Riley's involvement with Badcock has led to doubts and potential defaults. [Extracted from the article]

B. Riley Financial Inc., a boutique investment bank, is facing challenges due to its involvement with a struggling Texas home-furnishings chain, Conn's Inc. B. Riley made a loan to Conn's in December to help them acquire a troubled rival, but the twist is that the seller was Franchise Group Inc., where B. Riley is a major shareholder. The loan is potentially on the hook for about $148 million, and critics have raised concerns about the health of both FRG and B. Riley. However, B. Riley maintains that the loan will be fully repaid and that they are comfortable with their position. Conn's is facing financial difficulties and is considering bankruptcy. Short sellers have been betting against B. Riley, and the company's stock price has dropped. B. Riley has experience with debt workouts and bankruptcies and believes that the loan to Conn's is well-collateralized and fully secured. FRG has other assets and is seeking to raise cash. The Stephens family, senior lenders and common stockholders of Conn's, have an incentive to keep the company afloat. The challenges faced by B. Riley are rooted in its acquisition of W.S. Badcock and the subsequent sale of the business to Conn's. B. Riley had doubts about Badcock's business and stopped buying receivables, leaving FRG facing a potential default. B. Riley still has receivables tied to Badcock customers, and an economic downturn could affect their collectability. [Extracted from the article]

B. Riley Financial Inc., a boutique investment bank, is facing challenges due to its involvement with a struggling Texas home-furnishings chain, Conn's Inc. B. Riley made a loan to Conn's in December to help them acquire a troubled rival, but Conn's shares have since lost most of their value. Short sellers have been betting against B. Riley, and there are concerns about the health of Franchise Group Inc., the seller of Conn's, which B. Riley is a shareholder of. However, B. Riley maintains that the loan will be fully repaid and that they are comfortable with their position. Conn's is considering bankruptcy, and its financial troubles could potentially impact FRG and B. Riley. B. Riley has experience with debt workouts and bankruptcies and believes that the loan to Conn's is well-collateralized and secured. FRG has other assets and is seeking to raise cash. The Stephens family, senior lenders and common stockholders of Conn's, have an incentive to keep the company afloat. The challenges faced by B. Riley are rooted in its acquisition of W.S. Badcock and the subsequent decline in sales. B. Riley and FRG sold the Badcock business to Conn's, but B. Riley still holds receivables tied to Badcock customers. [Extracted from the article]

Italy's extension of guarantees on state-backed loans during and after the pandemic is causing restructuring challenges. The lack of a common framework for restructuring the €300 billion worth of loans is creating complexity as default levels rise. The rise in interest rates has led to some companies being unable to service their debts, and default rates on Italian non-financial corporate loans have increased. The lack of clarity on when state guarantees should be enforced, different approval processes, and uncertainty about the level of seniority of the guaranteed loans are contributing to the challenges. The negotiation approaches and transferability of the loans also vary. The government is discussing ways to make the process more efficient, and a legal grouping is working on guidelines for treating these loans in restructuring proceedings. [Extracted from the article]

Ethiopia's Prime Minister, Abiy Ahmed, has stated that ongoing discussions with the International Monetary Fund (IMF) and the World Bank could result in $10.5 billion of funding for the country. Ethiopia defaulted on its debt in December and is currently in talks with the IMF for a bailout program to restructure its loans. The focus of the discussions is on the timing of government reforms, which Abiy believes will alleviate the country's debt burden. [Extracted from the article]

Sri Lanka has reached an agreement with a group of commercial creditors to restructure its loans, bringing the country closer to completing its debt overhaul after a sovereign default. The agreement includes the use of macro-linked bonds and a governance-linked structure as part of plain vanilla instruments. This deal follows more than a year of negotiations and will help restore Sri Lanka's access to international capital markets and secure further funding from the International Monetary Fund. Sri Lanka's dollar bonds were among the top performers in emerging markets last year, and the government has already reached debt restructuring agreements with official creditors and holders of local debt. [Extracted from the article]

China has proposed that private creditors be involved in the early stages of debt restructuring talks for developing economies in order to expedite negotiations. The suggestion was made by China's Vice Finance Minister Liao Min during a meeting organized by the Paris Club. The involvement of private creditors in debt talks could help address the slow progress in providing relief to low-income nations facing mounting debt pressures, particularly due to differing views between Western countries and China. China's significant role as a bilateral creditor to emerging nations makes its participation crucial in these negotiations. [Extracted from the article]

The International Monetary Fund (IMF) has agreed to provide Zambia with $569.6 million in immediate disbursements to help the country cope with its worst drought in nearly 60 years. The funds will assist Zambia in achieving debt and fiscal sustainability, improving public governance, and promoting inclusive growth to enhance the well-being of its people. The money will also be used for drought relief measures. The drought has led to high inflation and hindered economic growth, with the economy expected to expand by only 2.3% this year. The Zambian government plans to supplement its spending plan by $1.6 billion to mitigate the impact of the drought and service its restructured external loans. While Zambia recently resolved its default on dollar bonds, it still needs to negotiate agreements with non-bondholder commercial creditors, including China Development Bank and Industrial and Commercial Bank of China. The IMF has welcomed Zambia's progress but urges the country to reach timely agreements with its remaining private creditors to ensure long-term debt sustainability. [Extracted from the article]

In 2023, the U.S. experienced an unprecedented number of major natural disasters, resulting in significant losses and the loss of hundreds of lives. As we enter the season when natural disasters commonly occur, it is important to know what to do in the aftermath. The first priority should be to focus on physical and mental health, followed by documenting the damage and filing insurance claims. Assistance can also be sought from organizations such as FEMA and nonprofit groups. It is also recommended to contact utility providers and lenders to discuss payment plans or modifications. Finally, trimming expenses and negotiating lower rates can help alleviate financial strain. [Extracted from the article]

JPMorgan Chase & Co. is reportedly in discussions to arrange a three-year loan of approximately $1.1 billion for two distressed Chinese builders, Logan Group Co. and KWG Group Holdings Ltd. The loan would be backed by a luxury home project in Hong Kong called The Corniche. The loan is seen as a potential solution to clear a major obstacle in Logan's $8 billion offshore debt restructuring. The details of the loan are still being negotiated, and JPMorgan, Logan, and KWG have declined to comment. [Extracted from the article]

Chinese developer Logan Group Co. is facing a crucial stage in its $8 billion offshore restructuring as it has three months to pay or refinance a loan for a luxury home project in Hong Kong. Private debt holders are concerned about the risk and have not received finalized terms from Logan. The loan, which is not included in Logan's restructuring plan, is a HK$10.2 billion syndicated facility that matures in August. If Logan fails to pay or refinance the loan, lenders could seize the project and jeopardize the restructuring plan. [Extracted from the article]

Ghana has received a draft agreement to restructure its debts with official creditors, which will allow for a $360 million disbursement from the International Monetary Fund (IMF). The country is currently reviewing the memorandum of understanding on debt treatment with lenders. This draft MOU is an important step in the debt workout process, which includes reaching separate terms with eurobond investors. The IMF's Executive Board is expected to approve the disbursement by the end of next month. The funds will help strengthen Ghana's reserves and provide support for its currency, the cedi. [Extracted from the article]

Ghana has received a draft agreement to restructure its debts with official creditors, which will allow the country to receive a $360 million disbursement from the International Monetary Fund (IMF). The agreement is currently being studied by Ghana, and if approved, it will enable the IMF's Executive Board to release the funds by the end of next month. This is an important step in Ghana's debt restructuring process, as it has already reached agreements with its official creditors and is now working on terms with Eurobond investors. [Extracted from the article]

A recent study conducted by researchers from the Indian Institute of Management in Ranchi, India, examines the impact of the Reserve Bank of India's (RBI) policies on bank lending during the COVID-19 pandemic. The RBI implemented a combination of monetary policies and temporary forbearance policies to support economic expansion and credit growth. The study found that while there was little evidence of credit misallocation to non-financial listed firms, there was a significant increase in zombie lending to high rent-seeking industries. The researchers suggest that accommodative monetary policy can reduce credit misallocation concerns, but caution that forbearance alone may exacerbate adverse effects. [Extracted from the article]

A federal judge has partially dismissed allegations of Real Estate Settlement Procedures Act (RESPA) violations in a loan modification case against Cenlar. The judge allowed claims related to a document known as a notice of error to move forward, but dismissed other claims related to a request for information. The case centers on a dispute where plaintiffs asked for a correction on a name spelling in a modification agreement, which was recorded without an adjustment to billing. The judge emphasized the importance of a servicer conducting a reasonable investigation and providing a written notification in response to a notice of error. This case is part of a broader body of law that servicers and attorneys are reviewing to update compliance parameters for handling qualified written requests under RESPA. Another recent case involving Specialized Loan Servicing also exemplifies the broader body of litigation centered on responses to formal borrower communications. The case involves allegations made by a former couple regarding a loan that dates back to a period of loose mortgage underwriting and a housing crash. The plaintiffs allege that the servicer added an erroneous amount to their debt, and although the servicer provided a response to their qualified written request, it was in violation of RESPA. The plaintiffs eventually applied for and received approval for a short sale, but they believe they should have received funds back. The servicer has filed a cross complaint, alleging that the plaintiffs' financial mismanagement was the cause of their default and damages. The plaintiffs have filed a demurrer to the cross complaint, arguing that the servicer [Extracted from the article]

French IT company Atos SE is seeking €1.2 billion in cash and loans to fund its business through 2025, according to a restructuring plan presented to creditors. The company aims to cut its debt by €2.4 billion by 2026 and extend its remaining debt maturities by five years. Atos has faced financial difficulties, with talks to sell parts of its business failing and its shares falling significantly. The French government is prioritizing Atos's financial stability and wants its strategic activities to remain under French ownership. Alternative rescue plans are being considered, including a potential takeover offer from Czech billionaire Daniel Kretinsky. [Extracted from the article]

Zambia's efforts to escape default have shifted to its $3.5 billion commercial debt owed to Chinese lenders after reaching a deal with holders of its eurobonds. The country still needs to revamp $1.9 billion borrowed from state-owned creditors in China, and discussions with these creditors have progressed well. The recent eurobond deal is expected to speed up the process of restructuring the remaining debt. China, as the co-chair of Zambia's official creditor committee, has played a significant role in achieving progress. The agreement with bondholders sets a key milestone for Zambia and involves investors accepting larger losses than initially anticipated. The restructuring is expected to be completed by the end of May or early June. [Extracted from the article]

South Korea's financial watchdog, the Financial Supervisory Service (FSS), has called on banks to increase their support for struggling builders in light of concerns about distressed real estate projects. The FSS governor, Lee Bokhyun, highlighted the rising number of project finance sites experiencing worsening profitability due to high interest rates and construction costs. He urged lenders to consider expanding the size of the PF stabilization fund and actively restructure troubled loans. This comes as debt risks mount in the real estate sector, and officials aim to prevent broader market contagion. Both lenders and builders are encouraged to work together to successfully restructure troubled projects. [Extracted from the article]

Ghana's cedi, the third-worst performing currency in Africa, is expected to continue weakening despite a $3 billion bailout from the International Monetary Fund. The country has secured workouts with domestic and official creditors but is still negotiating with eurobond investors. While Ghana's international reserves have improved, they are still too thin to effectively defend the currency. Additionally, the upcoming presidential election poses a risk for foreign exchange demand pressure. The currency could depreciate a further 7.6% by December, according to analysts. [Extracted from the article]

The North Point office complex in Cleveland, consisting of two buildings, has been placed in special servicing by its lender after a $90 million loan was not repaid in September. The property is owned by Hertz Investment Group, which owns multiple office skyscrapers across the country and is facing financial challenges. Despite the post-pandemic office market downturn, efforts are being made to negotiate a loan modification to extend the maturity date of the existing loan. The property has maintained a 74% occupancy rate, and a broker's lien was filed due to unpaid commissions, indicating potential cash flow issues for Hertz. [Extracted from the article]