Distressed Assets

Overview

With a deep bench of professionals whose experience spans multiple prior downturns, Manatt welcomes the opportunity to demonstrate how our experience can be of use in today’s unsettled environment.

Building on our decades of experience, we are quick and creative and have a deep knowledge of restructuring, repositioning and navigating the various challenges and opportunities that you may face. Our strength and ability to restructure transactions are enhanced by our work serving as counsel for some of the nation’s leading lenders, borrowers, investors, owners and operators on their most sophisticated and complex matters. Our goal in each case is to create solutions that preserve value by the application of our thorough understanding of applicable finance, restructuring, insolvency and commercial law. We take a highly strategic, nimble and business-sensitive approach, which is enhanced by the firm’s deep experience in multiple industries and backed by our extensive resources in a broad spectrum of legal expertise in related disciplines.

A selection of our clients includes:

Sellers of distressed asset and loan portfolios in:
- Structuring deals and sale strategies
- Seller due diligence and organization
- Market evaluation
- Deal negotiation
- Closing and post-closing matters, including litigation by borrowers and co-lenders
Buyers of distressed asset and loan portfolios in:
- Risk analysis and due diligence, including land use, entitlement and environmental due diligence
- Asset-level business planning
- Contract negotiation
- Closing and conveying
- Post-closing matters, including asset management, restructurings and/or enforcementâ€‹
Financial institutions and users of capital in:
- Restructurings of mezzanine and senior debt facilities and equity investments
- Loan portfolio purchases and sales and related governance matters, such as compliance with FDIC audit and reporting requirements
Lenders and borrowers in workouts and restructurings of loans (both portfolio and securitized loans), including:
- Portfolio and asset-level analysis and strategic planning
- Loan modifications
- Loan forbearance agreements
- Deeds in lieu of foreclosure
- Discounted payoffs and other strategies
Creditors in:
- Foreclosures and deed-in-lieu transactions
- Bankruptcies, creditors’ rights proceedings and lender liability defense
- All aspects of real property litigation, including mechanic’s lien and stop notice litigation, claims against title insurers, and other litigation
Owners and operators of real estate assets in restructurings of:
- Equity
- Partnership restructurings
- Ground lease workouts

Team

Steve Edwards

Senior Counsel

[email protected]
Phone: 714.371.2546

Clayton B. Gantz

Partner

[email protected]
Phone: 415.291.7600

Carl L. Grumer

Partner

[email protected]
Phone: 310.312.4149

Ivan L. Kallick

Senior Counsel

[email protected]
Phone: 310.312.4152

Experience

A selection of our most notable experience includes:

Multiple national and regional banks in the:
- Sale of a residential development loan portfolio to a confidential buyer, the net price constituting a high-water mark for the seller, with subsequent portfolio dispositions selling at much greater discounts. We closed the transaction in 30 days and acted as financial and strategic advisor in structuring the sale, in addition to our normal legal role.
- Sale of a portfolio of nonperforming loans secured by commercial properties in California and other western states to a New York investment bank for more than $100 million. The distressed asset sale was a key element of our client’s plan to restructure its balance sheet during a challenging regulatory and financial environment.
- Sale of a portfolio of 16 nonperforming loans secured by residential real estate properties located in California and other western states. The sale was conducted through an auction involving a limited number of prequalified buyers, and the net price to the selling institution turned out to be something of a high-water mark, subsequent portfolio sales having sold at much greater discounts.
- Restructuring a land development loan secured by residential lots and a golf course in Arizona. Our client was part of a syndicate of lenders holding notes totaling $90 million. As part of the restructuring, personal guarantees were released for new consideration and a general release of the syndicate lenders was obtained. The original notes were sold back to the borrower at a discount following a recapitalization of the borrowing entity using an outside investor.
- Workout and resolution of substantially all of Citicorp’s California and western states distressed mortgage portfolio.
- Litigation, receivership and sale of a portfolio of 11 low-income housing properties, which was infused by fraud perpetrated by the developer. Our team guided the client through the myriad complex insolvency, real estate, tax, regulatory and receivership issues, and successfully closed the sale of all 11 properties.
A real estate investment firm and its affiliates in the restructuring of $330 million in a construction loan debt secured by a condominium hotel resort on the California coastline. We had previously represented the investment firm as the developer in obtaining a construction loan from the now-defunct Corus Bank. Corus was on the FDIC watch list for 13 months before the agency seized its assets. We worked with the FDIC to extend and modify the construction loan; and after the agency sold the Corus assets to an investor group, we worked with the investor group to restructure the outstanding construction loan and a mezzanine loan.
A residential mortgage loan company in the workout of troubled assets in its loan and REO portfolios, including the disposition of numerous properties and the sale of loans, many of which are secured by real estate assets located in a number of western states or are part of a master loan facility covering multiple projects in various stages of development. This work requires taking a multidisciplinary approach, and we have involved our real estate, land use, and workout and bankruptcy attorneys.
A real estate developer in the acquisition of a note secured by a lien on a retail development site. We then represented our client in foreclosing on the underlying real property collateral and defending against claims asserted by the borrower’s principal.
A major investment bank in its acquisition of several billion dollars’ worth of mortgage loans and REO properties located around the world. Our team evaluated over 300 loan and REO assets—more than 500 properties in just four weeks—handling title, documentation, bankruptcy, transfer restriction and other matters. Contract negotiations were handled simultaneously with the conduct of due diligence, and the conveyancing required the negotiation and execution of thousands of closing documents. The entire transaction was successfully concluded in only four months.
Sellers and buyers of portfolios of distressed mortgage loans in over 65 transactions aggregating in excess of $5 billion. Loan sellers included Bank of America, Wells Fargo, Central Pacific Bank, Sumitomo Bank of California and Wilshire Savings & Loan. Loan purchasers included Lehman Brothers, Wells Fargo and Morgan Stanley. Most acquisitions were followed by representation of the acquirer in the resolution of the acquired portfolio.
A commercial bank in a “friends and family” program to restructure its defaulted loan portfolio with its existing borrowers. This resulted in a significantly less steep discount to the lender as opposed to selling the loans in a portfolio transaction.

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