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MMM Launches Commercial Real Estate Debt Management Practice
Published: November 21, 2008
By Anuradha Kher, Online News Editor
Atlanta--To help companies and individuals struggling with the credit crisis, Morris, Manning & Martin LLP, a law firm based in Atlanta, has launched a commercial real estate debt management practice, offering legal support and practical business advice to real estate owners.
Due to the state of the economy and the housing market in particular, several other firms have recently launched groups to help clients deal with financial or management issues.
For example, Colliers Abood Wood-Fay recently launched its Distressed Property Services Group and Cushman & Wakefield formed the Resolution Group, a team of property investment and management professionals from across the U.S., to help clients maximize the value of individual assets, portfolios and loans that are facing a variety of challenges stemming.
MMM Partner Nick Sears, who heads the new group at Morris, Manning & Martin, says, "Refinancing simply may not be available to replace mortgage loans as they mature. Moreover, if the economy continues to degenerate, borrowers may not be able to derive sufficient cash flow from their properties to make regular monthly debt service payments.
"Our team is particularly well-situated to assist commercial real estate developers and owners with managing their relationships with lenders, as well as the lenders' loan servicers, in restructuring mortgage and mezzanine loans, identifying tax issues and resolving joint venture partnership disputes," Sears adds.
The firm plans to advise borrowers on how to operate their properties to avoid the "recourse" pitfalls in conduit loan documentation, which could result in personal liability of the "carveout" guarantors.
Sears explains, “Over the last 10 to 15 years, in many commercial real estate loans, the lender agrees to limit its collection efforts to foreclosing on the real estate collateral except for certain 'carve out' exceptions. When these exceptions occur, the lender may then pursue collection of the debt from any assets of the borrower and individual guarantors.”
For example, when actions of the borrower result in a decline in the value of the collateral and in a sale of the collateral without the lender's permission or the borrower's voluntary bankruptcy.
"The firm can also help members of the real estate industry look ahead and take advantage of new opportunities afforded by the economic crisis," he says.
The new team includes lawyers skilled in banking, real estate, litigation, bankruptcy and tax issues. Sears along with Tom Gryboski, a partner in the firm's Real Estate Group, and Simon Malko, a partner in the Litigation Group, will work in the debt management group.
