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Clients approach Farragut Group when they are in default on their commercial real estate debt or about to be in default on this debt. Many of our clients have never been in default before and are concerned about a number of issues including: While answers to these questions vary based on the unique facts and circumstances of each transaction, Farragut Group applies a multi-disciplined and comprehensive approach to resolving troubled real estate transactions that draws on our expertise in real estate and finance as well as our legal expertise in real estate transactions, bankruptcy and litigation. This approach includes:
  1. Thorough analysis of the value of the real estate collateral and a comparison of this value to the level of outstanding debt;
  2. Analysis of any exposure to recourse obligations;
  3. Analysis of the legal documents including: i) potential defenses; ii) bankruptcy analysis; and iii) potential for springing recourse;
  4. Based on the above, development of an integrated legal and real estate strategy;
  5. Development of a comprehensive case analysis for submission to the lender. Within this case, Farragut Group generally includes a Discounted Payoff Offer (“DPO”) Alternative for the Lender and compares this DPO to the Lender’s alternative disposition alternatives of selling the loan, or foreclosing and reselling the property;
  6. Assisting our clients in securing the most attractive financing possible for the DPO;
  7. Assisting our clients in structuring the DPO transaction so as to minimize negative tax consequences.
Our experience has proven that this approach maximizes the opportunity for success for our clients. By engaging the creditor in a rational discussion of value and alternative resolutions, we often mitigate unwanted foreclosure and bankruptcy, and minimize unnecessary expenditures on legal exercises.
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