Commercial Loan Workout & Bankruptcy

Lemery Greisler’s experience with commercial loan workout includes the innovative application of bankruptcy law to resolve commercial loan disputes.

In one case, the Firm was able to achieve full recovery for an institutional lender on a substantial judgment against an individual who thought he had successfully shielded his assets from creditors. After obtaining summary judgment on a commercial loan obligation, the lender was faced with an individual obligor who lived a comfortable lifestyle but had shielded his assets through trusts. The only asset in the borrower’s name was a tenancy by the entirety interest in his marital residence worth substantially more than the amount owed. To solve this situation, we recommended that the lender commence an involuntary bankruptcy against the borrower. This allowed the lender to avail itself of the power of the Bankruptcy Court to sell a jointly held property—a remedy not normally available in New York State Court when a marital residence is involved. After the commencement of the involuntary bankruptcy case, the borrower quickly arranged to pay the judgment in full, rather than remain a debtor under the jurisdiction of the federal court and risk the sale of his long-time homestead.