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A lender’s ultimate remedy for dealing with a distressed and over-leveraged LIHTC project is to foreclose on the project. Foreclosure is the primary unilateral remedy that may be undertaken by a lender and will generally be the remedy against which a negotiated restructuring will be measured and evaluated. READ MORE
While these ultimate outcomes are the same as those involving workouts of market-rate properties, there are unique issues that must be addressed and analysis that must be undertaken in determining which outcome is the most appropriate in a LIHTC workout. In this post, we will explore how a lender should use the early stages of a workout to better its position, analyze its alternatives and select the best workout or exit strategy. READ MORE
In any workout or bankruptcy, it is important to understand the value of a lender’s collateral, because the value of the collateral will largely determine the amount of the lender’s recovery. This is particularly true in a workout or bankruptcy involving an LIHTC project because under the federal LIHTC program, once a project is placed into service, all senior debt of the project owner must be non-recourse to the partnership and its partners. READ MORE
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