By Alicia Davis

Senior Attorney | Real Estate

Lenders often require their borrowers to be “special purpose entities” in real estate transactions. This is a way that lenders can mitigate their bankruptcy risk in the event that the borrower or any of its parent entities file for bankruptcy. In addition, since most real estate financing is non-recourse, lenders require that the borrower is a separate, special purpose entity so that no other property or business will impact the property which is the subject of the underlying loan. But what it means to structure a borrower as a “special purpose entity” can mean different things, depending on the underlying loan circumstances. This article examines the different elements typically required when structuring a borrower as a “special purpose entity.”

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By Nicholas E. Brandfon

Special Counsel | Real Estate

Can contracting parties waive all common law fiduciary duties? That was one of the questions presented to the New York Supreme Court, Appellate Division, First Department (the “Court”) in 111 West 57th Investment LLC, on Behalf of Itself and Derivatively on Behalf of 111 West 57th Partners LLC, et al. v. 111 W57 Mezz Investor LLC, 111 West 57th Partners LLC, et al. On March 30, 2021, the Court answered in the affirmative and modified the trial court’s decision to, among other things, uphold that a waiver of fiduciary duties is enforceable under Delaware law. At the same time, the Court allowed a claim of the Plaintiff (as defined herein) to proceed based on the Defendant’s (as defined herein) alleged breach of the duty of good faith and fair dealing as required by the New York Uniform Commercial Code (N.Y.U.C.C. § 1-304).

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By William Lo

Associate | Real Estate

It has become market standard practice for lenders to ensure that certain protections are provided with regards to insurance, one of which is a condition precedent that is required from the borrower: an insurance broker letter. Whilst it is not a finance document, the insurance broker letter can still in some transactions have the potential to elicit significant resources and time in order to negotiate and finalise its terms.

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Here is a rundown of some of Cadwalader's recent work on behalf of our clients.

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