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Who We Are Our People Practices News and Events Insights Offices Join Us Diversity Home > Practices > Distressed Asset Distressed Asset Today’s challenging combination of difficult economic, real estate and credit market conditions presents great risk for investors. Risk, however, creates reward for those with the experience and skill to evaluate, manage and exploit it. At Manatt, our professionals have the capability, market knowledge and real world “know how” necessary to help our clients achieve their goals in the distressed asset marketplace, partnering with them to successfully identify and capitalize on every opportunity to further their business goals. Key Strengths As one of the country’s leading law firms advising financial institutions and investors, Manatt brings proven expertise and sound business judgment to every distressed asset deal. We offer our clients a full spectrum of services relevant to participants in the distressed asset arena, including: Representation of financial institutions in loan restructurings; Representation of creditors in foreclosures, bankruptcies and creditors’ rights proceedings; Representation of loan portfolio sellers and buyers; Representation of parties to CMBS securitized loans; Representation of financial institutions in loan portfolio and related governance matters with regulatory agencies such as the FDIC; and Representation of private buyers of failed bank loan portfolios being marketed through the FDIC receivership auction process. Extensive Experience Our lawyers are recognized as domestic and international players in workouts, financial restructurings, bankruptcies and creditors rights litigation, having: Represented creditors in the restructuring of thousands of complex loans, including commercial mortgage loans and other debt securities secured by assets in the United States, Europe, Asia and Latin America; Represented buyers in over 45 non-performing loan portfolio purchases, from initial asset-level due diligence and pricing, contract negotiation, closing and conveyancing, to post-acquisition servicing, including workouts, foreclosures and creditors’ rights litigation; Represented sellers in more than a dozen transactions valued at more than $2 billion, advising our clients regarding deal structure, pre-sale asset positioning strategies, purchase and sale agreements and post-closing purchase agreement administration; Represented creditors in the origination and restructuring of mezzanine debt financings; Represented participants in loan securitizations and capital markets transactions involving a variety of asset types; and Represented acquirers and targets in connection with the acquisition of financial and real estate operating or holding companies. Bankruptcy and Restructuring Transactions Our restructuring practice covers all creditor and investor perspectives on loan recovery and debt restructuring both inside and outside of bankruptcy, with particular emphasis on institutional clients. Because real estate is often the most important collateral involved in a bankruptcy filing, we help lender clients resolve problems in the management and operation of foreclosed real estate, the servicing of mortgages and the general administration of loan portfolios. We have extensive experience in workouts of problem properties and mortgage investments, including restructurings, foreclosures and bankruptcies. We also advise lenders on the risks involved in holding, managing and disposing of troubled real estate, particularly lender liability, environmental risk management and regulatory issues. Our firm’s bankruptcy lawyers have negotiated and prepared the documentation for debtor-in-possession (DIP) financing transactions for many clients, including lenders. We also represent numerous clients in structuring transactions to purchase assets and companies involved in Chapter 11 and Chapter 7 cases, including guidance in evaluating and acquiring assets from bankruptcy estates and distressed businesses, whether as straightforward 363 sales transactions or as proponents of restructuring plans of reorganization. Manatt’s real estate-related bankruptcy and workout experience extends to residential development, resort hotels and other hospitality properties, agricultural properties, healthcare-related projects, office, retail and multifamily projects, restaurants and other franchise-related real estate assets. FDIC Public-Private Investment Program The FDIC has proposed a program for eliminating the overhang of troubled legacy loans and mortgage backed securities from the books of participating banks through the use of private incentives to pre-qualified private buyers in the form of significant equity participations alongside an equal U.S. Treasury co-investment and fully guaranteed debt. The PPIP structure envisions a market driven auction process designed to encourage both potential sellers and buyers, guided by independent valuation advice, to facilitate appropriate price determination for those legacy assets. The FDIC intends to maintain rigorous oversight of the entire process so as to both encourage identification of legacy loans and securities to be sold by banks and the participation of pre-qualified bidders in the auction process. Our work on behalf of both buyers and sellers of distressed asset portfolios, including buyers from FDIC, combined with our deep understanding and familiarity with banking and bank regulation, make us ideally suited to assist sellers, buyers or servicers participating in the FDIC public-private program. Loan Portfolio Transactions Loan portfolio purchase and sale transactions are highly complex. If properly managed, they can be an efficient way to acquire or dispose of debt and REO assets. If poorly managed, they present many traps and pitfalls. Our lawyers help clients develop asset acquisition and disposition strategies that suit their business objectives and risk tolerance, and work efficiently to implement those strategies throughout the contract drafting and negotiation, due diligence, pricing, conveyancing and post-conveyancing stages. Notably, our team closed one of the first portfolio deals to be consummated in the current market cycle, giving us valuable real-time market experience. Our work on both the buy and sell sides of portfolio transactions helps us stay abreast of the market. For example, in our role as buyer’s counsel, our extensive sell-side experience enables us to anticipate seller concerns and create transaction structures to address them, and vice versa. CMBS Transactions For loans that are transferred to pooled investment vehicles, such as mortgage-backed securities trusts, there are additional complexities associated with managing and working out problems. The securitization structure, together with applicable REMIC (and sometimes grantor trust) tax considerations and contractual limitations, tend to restrict the choices available to both borrower and lender. They also add layers of procedural formalities to the financial analysis and communications among parties. Our lawyers help borrowers, servicers, investors, trustees and other parties to securitized commercial mortgage loans understand the governing securitization documents, and how those documents interrelate with the loan documents. Based on this understanding, we then assist in developing workout strategies and options. Overview Representative Matters Selected Clients Contacts Press Releases Press Coverage Newsletters Events

Distressed Asset

Today’s challenging combination of difficult economic, real estate and credit market conditions presents great risk for investors. Risk, however, creates reward for those with the experience and skill to evaluate, manage and exploit it. At Manatt, our professionals have the capability, market knowledge and real world “know how” necessary to help our clients achieve their goals in the distressed asset marketplace, partnering with them to successfully identify and capitalize on every opportunity to further their business goals.

Key Strengths
As one of the country’s leading law firms advising financial institutions and investors, Manatt brings proven expertise and sound business judgment to every distressed asset deal. We offer our clients a full spectrum of services relevant to participants in the distressed asset arena, including:

Representation of financial institutions in loan restructurings;
Representation of creditors in foreclosures, bankruptcies and creditors’ rights proceedings;
Representation of loan portfolio sellers and buyers;
Representation of parties to CMBS securitized loans;
Representation of financial institutions in loan portfolio and related governance matters with regulatory agencies such as the FDIC; and
Representation of private buyers of failed bank loan portfolios being marketed through the FDIC receivership auction process.

Extensive Experience
Our lawyers are recognized as domestic and international players in workouts, financial restructurings, bankruptcies and creditors rights litigation, having:

Represented creditors in the restructuring of thousands of complex loans, including commercial mortgage loans and other debt securities secured by assets in the United States, Europe, Asia and Latin America;
Represented buyers in over 45 non-performing loan portfolio purchases, from initial asset-level due diligence and pricing, contract negotiation, closing and conveyancing, to post-acquisition servicing, including workouts, foreclosures and creditors’ rights litigation;
Represented sellers in more than a dozen transactions valued at more than $2 billion, advising our clients regarding deal structure, pre-sale asset positioning strategies, purchase and sale agreements and post-closing purchase agreement administration;
Represented creditors in the origination and restructuring of mezzanine debt financings;
Represented participants in loan securitizations and capital markets transactions involving a variety of asset types; and
Represented acquirers and targets in connection with the acquisition of financial and real estate operating or holding companies.

Bankruptcy and Restructuring Transactions
Our restructuring practice covers all creditor and investor perspectives on loan recovery and debt restructuring both inside and outside of bankruptcy, with particular emphasis on institutional clients. Because real estate is often the most important collateral involved in a bankruptcy filing, we help lender clients resolve problems in the management and operation of foreclosed real estate, the servicing of mortgages and the general administration of loan portfolios. We have extensive experience in workouts of problem properties and mortgage investments, including restructurings, foreclosures and bankruptcies. We also advise lenders on the risks involved in holding, managing and disposing of troubled real estate, particularly lender liability, environmental risk management and regulatory issues.

Our firm’s bankruptcy lawyers have negotiated and prepared the documentation for debtor-in-possession (DIP) financing transactions for many clients, including lenders. We also represent numerous clients in structuring transactions to purchase assets and companies involved in Chapter 11 and Chapter 7 cases, including guidance in evaluating and acquiring assets from bankruptcy estates and distressed businesses, whether as straightforward 363 sales transactions or as proponents of restructuring plans of reorganization.

Manatt’s real estate-related bankruptcy and workout experience extends to residential development, resort hotels and other hospitality properties, agricultural properties, healthcare-related projects, office, retail and multifamily projects, restaurants and other franchise-related real estate assets.

FDIC Public-Private Investment Program
The FDIC has proposed a program for eliminating the overhang of troubled legacy loans and mortgage backed securities from the books of participating banks through the use of private incentives to pre-qualified private buyers in the form of significant equity participations alongside an equal U.S. Treasury co-investment and fully guaranteed debt. The PPIP structure envisions a market driven auction process designed to encourage both potential sellers and buyers, guided by independent valuation advice, to facilitate appropriate price determination for those legacy assets. The FDIC intends to maintain rigorous oversight of the entire process so as to both encourage identification of legacy loans and securities to be sold by banks and the participation of pre-qualified bidders in the auction process.

Our work on behalf of both buyers and sellers of distressed asset portfolios, including buyers from FDIC, combined with our deep understanding and familiarity with banking and bank regulation, make us ideally suited to assist sellers, buyers or servicers participating in the FDIC public-private program.

Loan Portfolio Transactions
Loan portfolio purchase and sale transactions are highly complex. If properly managed, they can be an efficient way to acquire or dispose of debt and REO assets. If poorly managed, they present many traps and pitfalls. Our lawyers help clients develop asset acquisition and disposition strategies that suit their business objectives and risk tolerance, and work efficiently to implement those strategies throughout the contract drafting and negotiation, due diligence, pricing, conveyancing and post-conveyancing stages. Notably, our team closed one of the first portfolio deals to be consummated in the current market cycle, giving us valuable real-time market experience.

Our work on both the buy and sell sides of portfolio transactions helps us stay abreast of the market. For example, in our role as buyer’s counsel, our extensive sell-side experience enables us to anticipate seller concerns and create transaction structures to address them, and vice versa.

CMBS Transactions
For loans that are transferred to pooled investment vehicles, such as mortgage-backed securities trusts, there are additional complexities associated with managing and working out problems. The securitization structure, together with applicable REMIC (and sometimes grantor trust) tax considerations and contractual limitations, tend to restrict the choices available to both borrower and lender. They also add layers of procedural formalities to the financial analysis and communications among parties.

Our lawyers help borrowers, servicers, investors, trustees and other parties to securitized commercial mortgage loans understand the governing securitization documents, and how those documents interrelate with the loan documents. Based on this understanding, we then assist in developing workout strategies and options.