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Commercial Real Estate Security Mounting a Post-Crisis Comeback in U.S.

 
 

April 28, 2015

 
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  NEWS AND ANALYSIS

COMMERCIAL REAL ESTATE SECURITY MOUNTING A POST-CRISIS COMEBACK IN U.S.

A Wall Street financial instrument that amplified losses during the U.S. property-bubble collapse is seeing a revival, Bloomberg News reported today. A specialty finance lender backed by private-equity firm H.I.G. Capital on Friday sold $209 million of commercial mortgage bonds tied to 31 properties. Underwriter Deutsche Bank AG called it a "middle market intermediate-term commercial real estate" deal. Moody's Investors Service used a title more familiar to Wall Street: a commercial real estate collateralized loan obligation (CRE CLO). These instruments, which flourished under a similar name before the financial crisis, are making a comeback as specialty lenders look for new ways to fund a real estate market that's facing $1 trillion of maturing debt over the next three years. The underlying collateral is less risky than the kind backing securities that collapsed amid a wave of mortgage defaults in the credit crisis, according to analysts. Morgan Stanley says that around $5 billion of CRE CLOs could be sold this year through 15 transactions, compared with eight such deals in 2013. "While the envelope is getting pushed a bit, levels and structure remain healthy -- significantly better than pre-crisis levels," said Ed Shugrue, chief executive officer of Talmage LLC, which manages $1.2 billion mainly in commercial real estate. Read more.

CORINTHIAN COLLAPSE RENEWS CALLS FOR LOAN FORGIVENESS

Student advocates and lawmakers are renewing calls for loan forgiveness after Corinthian Colleges’ announcement Sunday that it will close its remaining 28 campuses enrolling 16,000 students, Collections & Credit Risk reported today. Lawmakers including Sen. Dick Durbin (D-Ill.) and Sen. Elizabeth Warren (D-Mass.), in the wake of the closings, asked the Department of Education and major federal loan servicers to ensure that Corinthian students know their options for financial relief. The closings mark a quick end to what had been a steady dismantling of one of the country's largest for-profit schools. Corinthian's network of for-profit schools once included 100 campuses across the U.S., with about 74,000 students enrolled. But last summer the Education Department intervened in the company’s operations, cutting off Corinthian's access to federal student loans, without which it could not survive. It was an unprecedented move that followed allegations that Corinthian falsified graduation statistics, inflated job numbers and abused the student lending process. Since then the school has been winding down its operations. The government previously struck a deal with ECMC Group, allowing the student debt guarantor to acquire some of Corinthian's campuses. ECMC then agreed to wipe out $480 million in debt to avoid any liability for Corinthian's alleged illegal activity. Read more.

HOUSE HEARING TOMORROW EXAMINES THE "FAIRNESS IN CLASS ACTION LITIGATION ACT OF 2015"

The House Judiciary's Subcommittee on the Constitution and Civil Justice will hold a hearing tomorrow at 3 p.m. ET to examine H.R. 1927, the "Fairness in Class Action Litigation Act of 2015." The bill would reform class action rules so that classes are made up of members with the same type and extent of injury. Those with less injury could still join class actions, but must do so separately from parties who suffered greater harm. Witnesses will include John H. Beisner of Skadden, Arps, Slate, Meagher & Flom LLP, Mark A. Behrens of Shook, Hardy & Bacon LLP, Prof. Alexandra D. Lahav of the University of Connecticut School of Law and Andrew J. Trask of McQuire Woods. For prepared witness testimony, please click here.

THURSDAY: BLOOMBERG AND ABI’S "EYE ON BANKRUPTCY" WEBINAR EXAMINES LEADING BANKRUPTCY OPINIONS FROM JANUARY TO MARCH

 

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ABI members are invited to watch the next edition of Bloomberg's complimentary "Eye on Bankruptcy" webinar from 1-2 p.m. ET on Thursday to examine the latest opinions. The program is jointly prepared by ABI and Bloomberg Law, and features Bill Rochelle, editor-at-large and bankruptcy columnist for Bloomberg News, talking with Chief Judge Jeffery P. Hopkins (S.D. Ohio), an editor of Bloomberg Law: Bankruptcy Treatise, and Judge D. Michael Lynn (N.D. Texas), the Editor-in Chief of Bloomberg Law: Bankruptcy Treatise.

This webinar is the second in a series of monthly presentations designed to keep you up to date on changes in bankruptcy and restructuring; track recent filings, motions, and decisions; and implement revisions to bankruptcy rules and forms. For your complimentary registration, please register here and enter promotion code 'BNAAB15' upon checkout to register.

MISS THE KEYNOTE FORUM FEATURING BANKRUPTCY JUDGE STEVEN RHODES AT ABI'S 33RD ANNUAL SPRING MEETING? WATCH HERE!

If you were not able to attend the keynote forum featuring Bankruptcy Judge Steven Rhodes being interviewed by ABI past presidents at ABI's 33rd Annual Spring Meeting in Washington, D.C., make sure to watch the video here.

To view the other videos of keynotes, speeches and presentations at the Annual Spring Meeting, make sure to visit ABI’s Newsroom.

DISCOUNTED SUBSCRIPTIONS TO AUDIO ABI JOURNAL AVAILABLE FROM MODIOLEGAL!

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NEW CASE SUMMARY ON VOLO: RIVERA V. BANK OF AMERICA (5TH CIR.)

Summarized by Aaron Kaufman of Dykema Cox Smith

The Fifth Circuit affirmed the district court's summary judgment in favor of the mortgage lender. The four-year statute of limitations to foreclose on a residential real property after first accelerating the note did not bar the foreclosure in this case. The lender's foreclosure action in 2013, despite an initial notice of acceleration in 2004, was not time-barred under Texas law because the lender accepted payment from the borrower in 2006. Thus, the 2004 notice of acceleration was abandoned by the lender, and the lender's right to foreclose at a later time was restored for purposes of its subsequent notice of default and acceleration in 2010.

There are more than 1,700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.

NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: MINNESOTA SUPREME COURT REJECTS THE "PONZI SCHEME PRESUMPTION" IN CONNECTION WITH THE UNIFORM FRADULENT TRANSFER ACT

Rejecting the reasoning of a number of opinions by federal courts, a recent blog post reported that the Minnesota Supreme Court has held in a recent case that the "Ponzi Scheme Presumption" does not apply to claims brought under the Minnesota Uniform Fraudulent Transfer Act (MUFTA).

To read more on this blog and all others on the ABI Blog Exchange, please click here.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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NEXT EVENT:

9th Annual Credit and Bankruptcy Symposium
May 7-8, 2015
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UPCOMING EVENTS:

17th Annual New York City Bankruptcy Conference
May 14, 2015
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ABI/St. John's Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015
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14th Annual Litigation Skills Symposium
May 19-22, 2015
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5th Annual Memphis Consumer Bankruptcy Conference
June 5, 2015
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22nd Annual Central States Bankruptcy Workshop
June 11-14, 2015
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Early Bird Rate Goes Up Tomorrow!

Cross-Border Insolvency Symposium
June 18, 2015
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22nd Annual Northeast Bankruptcy Conference
July 9-12, 2015
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10th Annual Northeast Consumer Forum
July 9-11, 2015
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Beijing Insolvency & Restructuring Symposium
July 13-14, 2015
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20th Annual Southeast Bankruptcy Workshop
July 23-26, 2015
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11th Annual Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015
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  CALENDAR OF EVENTS
 

2015

May
- Credit and Bankruptcy Symposium
May 7-8, 2015 | Uncasville, Conn.
- New York City Bankruptcy Conference
May 14, 2015 | New York, N.Y.
- Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015 | New York, N.Y.
- Litigation Skills Symposium
May 19-22, 2015 | Chicago, Ill.

June
- Memphis Consumer Bankruptcy Conference
June 5, 2015 | Memphis, Tenn.
- Central States Bankruptcy Workshop
June 11-14, 2015 | Traverse City, Mich.
- Cross-Border Insolvency Program
June 18, 2015 | New York

 

 


July
- Northeast Bankruptcy Conference
July 9-12, 2015 | North Falmouth, Mass.
- Northeast Consumer Bankruptcy Forum
July 9-11, 2015 | North Falmouth, Mass.
- Beijing Insolvency & Restructuring Symposium
July 13-14, 2015 | Beijing, China
- Southeast Bankruptcy Workshop
July 23-26, 2015 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015 | Hershey, Pa.

 

 
 
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