This article describes a series of strategies and drafting techniques relevant to commercial real estate loan workouts and enforcement. The following is not a “how-to” primer on loan enforcement or restructuring the distressed loan. Instead this article identifies some of the current solutions and insights that have been observed, implemented and proposed during this pandemic-impacted workout cycle. These are “Real Estate Loan Enforcement Hot Tips for 2022.”
Pre-Workout Agreement
Consider the article (also by this author) in the New York Law Journal (The ‘Pre-Workout’ Agreement in Loan Workout Negotiations (Sept. 17, 2019)) for a summary of the terms and provisions of the fairly market-standard or accepted pre-negotiation (or pre-workout) agreement. In short, by preserving in writing the status quo among the parties, that agreement is designed to (1) protect the lender against post-default lender liability defenses and claims that purportedly arise during the course of discussions, and (2) pave the way for a risk-free negotiation, exchange of ideas, proposals and concessions and enhancements—none of which would be binding until a written agreement is approved and executed by all. (For a rather fulsome discussion of the exchange of concessions for enhancements in the distressed loan workout, see the article by this author, Exchange of Enhancements for Concessions—Insights into the Modern Loan Workout, appearing in the New York Law Journal on June 19, 2020.)
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