Distressed Asset Resolution Team (DART)

Seyfarth Shaw has established the Distressed Asset Resolution Team (DART), a dedicated interdepartmental team composed of attorneys drawn from several practice areas, including structured and real estate finance, bankruptcy and real estate litigation. DART specializes in real estate loan restructures, bankruptcy matters, foreclosure actions and the exercise of other loan document and state law remedies. Members of DART have extensive experience in real estate finance, real estate litigation, bankruptcy, real estate tax, ERISA, environmental matters and construction matters, many of which come into play when handling defaulted loans. With team leaders in Atlanta, Boston, Chicago, Houston, Los Angeles, New York, San Francisco, and Washington, D.C., Seyfarth Shaw is well-positioned to handle loan defaults across the country.

The cyclical nature of the real estate market is well documented and known to industry participants. Seyfarth Shaw recognizes the importance to the real estate lending community of being prepared to react in a timely and effective manner to defaulted loan situations. We have the knowledge and experience to help our lending clients optimize their positions with respect to their distressed real estate loan assets.

Distressed Financings

Many of our attorneys have been active in handling defaulted loans since the last major real estate downturn in the early 1990s and bring their considerable experience to bear in addressing distressed loans and loan portfolios. In defaulted loan matters, our attorneys work closely with those on the team with requisite subject matter experience to leverage their sophisticated knowledge of the representation of lenders in distressed situations. We have significant experience handling workouts, including the drafting and negotiation of pre-negotiation letters and forbearance agreements and the conduct of workout meetings, as well as in the enforcement of remedies, including foreclosures (contested and “consensual”), deeds in lieu of foreclosure, receiverships, and other remedies in law and equity. We draft, negotiate, and implement complex and extensive loan modifications, designed to reflect not only the then current status of the property and the applicable loan, but also the possibility of the loan principals or the property not meeting leasing, financial or other loan benchmarks. Our team members with a creditors’ rights focus have years of experience representing secured lenders in bankruptcy matters, including handling cash collateral, relief from stay, prepackaged bankruptcies, plan confirmation and opposition and other matters that typically arise in real estate bankruptcy cases. Our tax attorneys are “REMIC savvy” and, where applicable, are able to apply their knowledge to defaulted, securitized loan scenarios.

Members of the team are accustomed to counseling clients on workout strategies, with an emphasis not only on yielding optimal results and on expected borrower, borrower principal and guarantor actions and reactions under alternative scenarios, but also on time and cost factors. We approach these assignments in a proactive manner and value the importance of taking timely steps to protect and enforce our clients’ collateral positions. We are mindful of the borrower’s and its principals’ likely tax situations and the subsequent potential impact on their actions and reactions, and are also familiar with the not infrequent conflicting positions among the various parties composing the borrower side and the influence thereof on our client’s strategies and actions.

We also factor in environmental concerns and the leasing status of the applicable property, including the protection of material leases. We focus on ORE structures and seek to help maximize our clients’ economic position and minimize their exposure when taking over property ownership. We understand and have litigated conflicts with second priority lenders over intercreditor agreements. We also address issues and potential conflicts in syndicated transactions and where there is a “debt stack”, and handle related intercreditor and participation matters. Our attorneys are fully familiar with lender liability issues and defenses and counsel clients on avoiding exposure to, and limiting, such claims.

We conduct periodic meetings with clients to discuss current documentary and process-related issues and focus on other matters as requested by the client. Our team members work with clients to evaluate and update their documents and processes, streamlining where appropriate to address security and enforcement issues and to achieve efficiencies. Additionally, upon request, we will provide a web-based method for tracking the progress of workout and bankruptcy matters.