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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Bankruptcy

Date & Time
  • event Date

    Wednesday, June 21, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE course will discuss how the Section 1111(b)(2) election allows secured and undersecured creditors to command a higher payout and preserve any future increases in the value of its collateral. The panel will discuss the increasing use of waivers of the right to object to Section 1111(b)(2) in debtor-in-possession financing, how the election affects cramdown strategies, the intersection of Section 1111(b)(2) and Subchapter V and small business cases, cramdown interest rates, and how rates inform cramdown strategies.

Faculty

Daniel M. Pereira
Attorney
Stradley Ronon

Mr. Pereira concentrates his practice on bankruptcy, insolvency and related matters.  advises clients on a wide array of issues, including both transactional and litigation matters. Although Mr. Pereira primarily focuses his practice on representing creditors, he also has experience representing debtors and other interested parties, particularly foreign debtors, in cross-border insolvency and restructuring proceedings. Among other clients, Mr. Pereira has represented banks and other lending institutions, trade vendors, service providers, commercial landlords and tort claimants. He has appeared in numerous state and federal courts, pursuing, among other things, loan enforcement actions, receiverships and commercial foreclosures, defending and prosecuting preference and fraudulent transfer claims, and handling various other commercial litigation matters in addition to handling numerous out-of-court workouts.

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Travis Powers
Counsel
Hodgson Russ LLP

Mr. Powers advises clients in all aspects of complex commercial insolvency and restructuring under chapters 7 and 11, and subchapter 5, of the United States Bankruptcy Code, as well as in out-of-court debt workouts and Assignments for the Benefit of Creditors. Through the representation of several multi-national corporations and financial institutions, he has been involved ins several of the nation’s largest bankruptcy cases. In addition, Mr. Powers is an experienced commercial litigator, having represented some of the country’s largest special servicers in large-area commercial real property foreclosure actions in both state and federal courts throughout the country, including highly contested foreclosures of over one million square feet of commercial real estate in Central and Western New York.

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Description

Dramatic drops in the value of retail, hospitality, and office properties since 2020 have a significant effect on Chapter 11 processes and strategies, especially for real estate lenders becuase valuation of real estate assets typically drives restructuring. Considerably misunderstood, the Sec. 1111(b)(2) election is particularly relevant after values fall and lenders expect real estate values increase to pre-financial crisis levels.

Sec. 1111(b)(2) makes the most sense when the lender seeks to benefit from future appreciation of values, so they cover the entire value of the loan plus accrued interest--the value of the election claim. The appropriate cramdown interest rate plays a critical role in determining the value of the lender's claim.

There are several strategic decisions in a lender's determination of whether to make the election. Real estate owners have to understand these decisions to determine whether a lender's 1111(b) election can undermine the owner's cramdown objectives.

Listen as our authoritative panel of bankruptcy practitioners discusses the 1111(b)(2) election for secured lenders, strategies for lenders in determining whether to make the elections, and cramdown strategies for debtors who face an election by their lenders. The program will also discuss cramdown interest rates and the impact rates have on cramdown strategies.

Outline

  1. Scope of the 1111(b)(2) election
  2. Mechanics and timing of the election
  3. Strategies for secured lenders in considering the election
    1. Traditional Chapter 11
    2. Subchapter V cases
  4. Impact of the election on the debtor's cramdown plan
  5. Impact of cramdown interest rates on cramdown strategies

Benefits

The panel will review these and other vital questions:

  • Does the Section 1111(b) election mean different things in Subchapter V than in traditional Chapter 11 cases?
  • What opportunities does the 1111(b)(2) election present for secured lenders facing cramdown by the property owner?
  • What must real estate owners understand about the 1111(b) election to determine whether a lender's election can undermine the owner's cramdown objectives?
  • What impact does the cramdown interest rate play in determining the value of the lender's 1111(b)(2) election claim?