In this part two of our discussion of the foreclosure process on commercial real estate in Louisiana, we are demystifying the procedures involved in executory process foreclosures in Louisiana. While Louisiana does not allow non-judicial foreclosure options for creditors, it does provide a streamlined judicial process known as executory process foreclosure, allowing a creditor to
Foreclosure proceedings in Louisiana can be challenging for lenders and servicers not familiar with the Bayou State’s particular procedures. This blog post provides a brief introduction to Louisiana’s foreclosure process focused on mortgaged commercial or industrial property.
First and foremost, Louisiana is a judicial-foreclosure state. The foreclosing creditor must request and obtain a court order
Every few weeks, another news outlet reports that a wave of energy-related bankruptcy cases is on the way. See links below if you need some examples.[1] A recent decision in the Alta Mesa bankruptcy case about pipeline contracts has some important lessons for producers and midstream companies evaluating how future bankruptcy cases may affect
Intellectual property comprises some of the most valuable assets a business may hold – its brands, patents, know-how, and other intangible rights that make the business unique. The intellectual property assets (IP) throughout the energy sector—upstream, midstream, downstream and service providers along the way—will be affected as more energy companies seek bankruptcy relief in the
The Supreme Court of the United States recently handed down a decision on the statute of limitations period under the Fair Debt Collection Practices Act (the “FDCPA”) to start off its term. The case provides a lesson to practitioners to draft carefully; the failure to do so may result in the loss of the cause
Lenders who finance farm operations, including those who provide equipment, seed, fertilizer, and other farming-related products on credit, should be aware that the Family Farmer Relief Act of 2019 has been signed into law. This new law allows a “family farmer” with up to $10,000,000.00 in debt to restructure and to reduce debts under Chapter
Large and small offshore service companies are turning to the Bankruptcy Code for help with restructuring their balance sheet, and turning to Washington for help with generating more work.
One of the largest offshore service companies in the world, Tidewater, announced this week that it will file a Chapter 11
When lenders and borrowers want to modify the terms of an existing loan agreement, and the modifications are extensive and will affect many provisions of the agreement, the lender’s lawyer will often choose to draft an “amended and restated agreement” in order to document those modifications. A single amended and restated agreement will often be
The U.S. Fifth Circuit Court of Appeals dealt a blow to secured creditors in a recent opinion affirming a successful “cramdown” reorganization plan in a commercial real estate (“CRE”) case. See In re Village at Camp Bowie I, L.P., — F.3d — (5th Cir. Feb. 26, 2013), 2013 WL 690497. The panel opinion in Bowie allowed a debtor in CRE bankruptcy case to intentionally delay paying trade debt that it had cash available to pay and to classify those trade creditors as “impaired” under Chapter 11 – thus giving a class of friendly creditors the ability to vote for the debtor’s plan of reorganization. The court expressly rejected the argument that “artificially impaired” creditors that a debtor could pay in full, like the trade creditors in Bowie, should not be allowed to vote on a Chapter 11 plan. The result in Bowie was a confirmed plan based on the vote of unsecured creditors owed $60,000 over the objection of the fully secured creditor owed $32 million.
In Bowie, the debtor financed the acquisition and development of land in Fort Worth (the “Property”) with equity capital and short-term promissory notes (the “Notes”). The Notes were secured by a first mortgage on the Property. The debtor’s development of offices and retail did not do as well as planned. After a series of modification agreements and forbearance agreements to extend the due dates for the Notes, the then-current holder of the Notes initiated foreclosure proceedings on the Property. The debtor filed its petition for relief under Chapter 11 of the Bankruptcy Code one day before the scheduled foreclosure sale, which stayed the foreclosure proceedings.
Continue Reading “Artificially Impaired” Creditors Can Vote on Chapter 11 Plans in the Fifth Circuit
A recent opinion from the United States Bankruptcy Court in Baton Rouge, Louisiana shows that even experienced lenders and developers may not always understand how Louisiana’s Private Works Act applies to their project, and how much leverage a properly filed notice of contract can provide to a general contractor. Tuscany Reserve, LLC (“LLC”) was formed by sophisticated developers for the purpose of developing a new apartment complex in Baton Rouge. LLC obtained acquisition and construction financing from a bank (1st Bank), which properly recorded its mortgage on the project before work commenced. LLC hired “Contractor” to build the complex; Contractor recorded its notice of contract in the parish mortgage records. As often happens, a dispute developed between LLC and Contractor regarding the work performed and lack of payment. Contractor stopped work and filed a lien on the property under the Louisiana Private Works Act for $1.17 million. Contractor eventually agreed to cancel its lien in exchange for a promissory note and guarantees from LLC’s principals and collateral provided by an LLC affiliate. Once the lien was cancelled, 1st Bank funded two draw requests on the construction loan. LLC needed more money for the project and turned to a new lender (2nd Bank) for additional financing. 2nd Bank secured its loan with a collateral mortgage on the immovable property for the project; there were no liens in the property records when 2nd Bank recorded its mortgage. The relationship between LLC and Contractor soon soured, again, and Contractor filed two liens on the project, one for the original claim amount, plus interest, and another for $250,000.00. Contractor sued LLC and its principals on the matured promissory note, and also sued LLC based on its rights under the recorded construction contract and the Louisiana Private Works Act. LLC eventually filed for chapter 11 bankruptcy in the Middle District of Louisiana.