Dino Armiros

Erik Kantz

Chicago Partner Konstantinos (Dino) Armiros and Erik L. Kantz provided corporate legal work for the producing entity and also negotiated distribution agreements for the documentary ”Phunny Business: A Black Comedy,” premiering Thursday, February 23, at 7:30 CST, 8:30 EST on Showtime. Mr. Armiros serves as legal counsel for John Davies, director and producer of the documentary. “Phunny Business” will also  be available through XFinity TV’s On Demand library of movies as part of the networks’ recognition of Black History Month. Arnstein & Lehr is credited at the end of the movie.

The documentary chronicles the former Chicago comedy club All Jokes Aside which opened in the 1990′s. At the time it was the leading venue for African American comedians  in the country. Raymond Lambert, the owner of the club, is featured in the movie, along with a number of known comics, including  Jamie Foxx, Cedric The Entertainer, Steve Harvey,  George Wallace, Bernie Mac, JB Smoove, and Craig Robinson. The documentary has been well received in the film festival circuit. It has also received favorable press, with Roger Ebert giving it three stars. It was prominently featured in the Chicago Tribune, appearing as a front page story  in the Tribune’s A&E section.

To learn more about the documentary, click here.

Konstantinos (Dino) Armiros

Chicago Partner Dino Armiros spoke Friday on behalf of Chicago Partner Jimmy Chatz to attendees of the 97th annual Illinois Municipal League conference at the Hilton Chicago Hotel.  Mr. Armiros  presentation was entitled Financial Relief in Illinois – Is Chapter 9 Really an Option?  Mr. Armiros  discussed the potential in Illinois of using Chapter 9 of the U.S. Bankruptcy Code as a negotiating device and tool to reject unexpired collective bargaining agreements, providing relief from pension obligations and as a way of bringing unions and creditors to the bargaining table.

B.    Forbearance Agreements

Assuming that the loan has been modified on several occasions, perhaps to extend maturity or to obtain additional collateral, and those modifications have not corrected the problem that the borrower and lender are encountering, the next step is a forbearance agreement.  The basic concept of a forbearance agreement is that the lender agrees to forbear from exercising its remedies resulting from a borrower’s default provided that no further defaults occur during the forbearance period and that during that forbearance period the borrower takes certain steps creating benefit for all concerned.  At the point where the lender and the borrower are entering into a forbearance agreement, it should be clear to all concerned that the future of this particular credit in its current form is limited.
Because the forbearance agreement is a form of accommodation between the lender and the borrower, the lender will typically require certain essential provisions:

• Acknowledgment of Default. By its very name, a forbearance agreement contains a lender’s undertaking to forbear from exercising its remedies.  Those remedies are in play because the borrower has committed a default.  The borrower’s default may be non-monetary (such as financial covenant ratios being violated) or monetary (a payment has not been made or the ability to make future payments is in severe jeopardy).  Regardless, the lender will require that the borrower admit that there is a default.  Keep in mind that forbearance agreements are drafted with an eye towards future litigation.  Should litigation commence, the lender will not want to question whether a default existed.
• Acknowledgment of Validity. This is a corollary to the waiver of claims.  The lender should insist that the borrower acknowledge that the documents are valid, that the amount outstanding at the time the forbearance is signed is not in dispute and that the lender has the full array of rights available to it as a result of the admitted default.
• Forbearance Period. The Forbearance Agreement is always for a finite term.  In other words, the lender is granting the borrower a specific amount of time (be it 60 days, 6 months or, in rare circumstances, a year or longer) in order to implement a given strategy.  At the occurrence of the “drop dead” date, however, the lender needs to have the certainty that it can proceed with its remedies.
• Waiver/Release of Claims. One of the critical benefits that a lender obtains in the context of a forbearance agreement (again with an eye towards future litigation) is the borrower’s release of prior claims against the lender.  This release can take the form of a release or waiver or representation and warranty, but is a critical component of any forbearance agreement.  This is also a crucial decision point for the borrower.  In the event that the borrower believes the lender has wronged it in some manner (e.g., lender bounced payroll checks 3 months ago, or lender refused to fund a construction escrow without justification) that claim will now be surrendered in exchange for a precious commodity:  time.  The borrower must decide whether the benefit it will obtain from the breathing room that the forbearance agreement provides is worth the waiver.  Is the time given the Borrower to implement an alternative strategy more valuable than the defense or counterclaim that the borrower perceives it may have in any future action against the lender?  A borrower who executes a forbearance agreement thus makes the decision that time is a more valuable commodity than an unproven legal theory.  On the other hand, if the borrower is convinced that the lender’s wrongdoing is compelling enough to justify not entering into the forbearance agreement, that decision will no doubt precipitate litigation and the viability of the borrower’s claim will be tested in relatively short order.  In rare circumstances, a lender may execute a forbearance agreement without obtaining such a waiver or release but unique circumstances would have to be in place — such that the bargaining power is balanced in favor of the borrower.
• Borrower Covenants. As noted, the point of the forbearance agreement is to give the borrower an opportunity to implement its workout strategy.  For example, a real estate borrower may have a buyer in hand who is looking to close 60 or 90 days hence.  Given the uncertainty in today’s economic environment, however, the lender may be willing to allow the borrower an opportunity to let the transaction close, but if such a closing does not occur, it will want to be able to implement its remedies forthwith.  Alternatively, the borrower may be seeking new capital or a new tenant or the liquidation of other assets — all of which would take time.  The workout strategies are tailored to each situation.  The forbearance agreement captures them as covenants of the borrower during the forbearance period.

In addition to the foregoing core provisions, the following substantive provisions also are frequently found in forbearance agreements:

• Budget. While the borrower may not commit additional defaults during the forbearance period, a lender might wish to have tighter rein on the borrower’s operations, in particular if the lender is continuing to fund during the forbearance period.  A budget during the forbearance period will be on a cash basis, typically set forth in one week intervals and will allow for recurring and foreseeable non-recurring expenses during that period.  Commonly, the budget may allow for variance of say 5% on individual budget items and 10% in the aggregate.  Variations in the budget beyond those parameters would be an event of default and grounds to terminate the forbearance.
• Guarantors. To the extent that there are loan guarantors, be they individuals or companies, for the loan, it is imperative that those guarantors sign the forbearance.  The absence of such a signature could create a defense to a subsequenting action on the guaranty.  Although a well drafted guaranty should give the lender the latitude to extend the accommodations contained in a forbearance agreement, the lender would be well advised not to take the risk that a judge hearing the case in the future might find cause to disregard the language of that well drafted guaranty.
• Non-Waiver Due to the Course of Dealing. The fact that the lender is entering into this forbearance agreement with the fixed forbearance period does not create a basis for the borrower to argue that the forbearance period should be further extended or that the lender has waived enforcement of covenants and other obligations in the existing loan documents.
• Remedies. Remedies would be available to the lender both upon the occurrence of a default during the forbearance period and should the forbearance period expire without the borrower having satisfactorily consummated its strategies.  Such remedies would be those available under the applicable loan documents and perhaps unique remedies tailored to the circumstances created by the forbearance agreement.
• Bankruptcy Provision. It is always risky to try to dictate to a bankruptcy judge what he or she should do if a borrower seeks relief under the Bankruptcy Code.  Courts have enforced provisions where the borrower waives certain rights in connection with a lender’s motion to modify the automatic stay so as to foreclose on the subject collateral.  Such provisions can include the stipulation to lift the automatic stay without the necessity of an evidentiary hearing or for the lender to establish lack of adequate protection of its interest in collateral, the latter being an unnecessary element that a lender needs to prove in order to obtain modification of the automatic stay.  A covenant not to file bankruptcy, however, is not enforceable as against public policy.
• Financial Requirements. Although the special assets group is not making new loans, it does not mean that it should not be a profit center for the lender.  Thus, it is not uncommon for a lender to charge a forbearance fee and/or to require that the borrower reimburse the lender’s out of pocket expenses, typically the legal fees and expenses related to further securing the collateral.

At the conclusion of the forbearance period, either the borrower will have performed its covenants or it will have not.  At that point, the lender may choose to grant a new forbearance period (and perhaps charge another forbearance fee) or it may wish to proceed with its remedies.  If it chooses the latter option, it does so with many obstacles and defenses cleared out of the way.  On the other hand, from the borrower’s perspective, it has obtained the desired time it wishes to implement its workout strategy.  If it can persuade the lender that more time is warranted, having performed earnestly and in good faith during the forbearance period will help the borrower make its case for a further extension.

C.    Deeds in Lieu of Foreclosure
One of the remedies that might be built into a forbearance agreement is the provision for a deed in lieu of foreclosure.  Thus, if the forbearance period expires and the borrower remains in default, the lender may want to promptly obtain title to the subject property.  Alternatively, the parties may simply enter into an agreement for a deed in lieu.

There are a number of caveats, however, relating to a deed in lieu of foreclosure process.  Because a deed in lieu of foreclosure is an out of court process, it entails added documentation beyond the simple deed.  Thus, the lender may want to have a bill of sale, an ALTA statement, a GAP undertaking and transfer declarations.  If these are not obtained at the time the forbearance is signed, the lender may lack the leverage to obtain those documents once the forbearance period ends.  Note, however, that there is nothing necessarily tying a deed in lieu to the forbearance agreement.  Parties may simply negotiate a deed in lieu strategy as a quick way of “ending the pain.”
Another issue of concern is the question of merger.  In the event that the lender is the grantee in the deed in lieu, the mortgagee has thus become identical to the mortgagor and the underlying mortgage may be extinguished by merger.  This may be an appropriate result if there are no other lien holders or other title issues.  On the other hand, because of the distressed nature of the circumstances, it would be prudent to avoid even the possibility that there could be merger.  Thus, the deed in lieu agreement (and the actual deed itself) can stipulate that the underlying liens (typically the mortgage and assignment of rents) are not released or relinquished in the absence of a formal release.  Additionally, a “no merger” clause provides additional protection by stipulating the parties agree there will not be a merger of the liens with the title by virtue of the deed in lieu. Finally, the lender can create even greater protection against merger by establishing a special purpose entity to be the grantee for the particular transaction.
From the borrower’s perspective, a deed in lieu provides a quick exit.  Additionally, the grantee cannot seek a deficiency from the mortgagor.  On the other hand, those guarantors or even the borrower itself (if it is not a single purpose entity), will want to have comfort that the deed in lieu is providing finality.  Thus, a borrower may ask for a release of the underlying obligation, but a lender may wish only to provide a covenant not to sue, because a release or a cancellation of the underlying note could jeapodize the validity of the mortgage lien against third parties or in the event of a bankruptcy.  A properly worded covenant will protect the borrower/guarantor but will also provide benefit to the lender in that the survival of such claims may fend off third party claims whose positions may be improved if the claims against the borrower are extinguished.
Note also that a deed in lieu may not be suitable in the event that there are junior liens and/or other title issues.  Under those circumstances the borrower and lender may accomplish the same ends by proceeding with a consent foreclosure consistent with the applicable provisions of the Illinois Mortgage Foreclosure Act, 735 ILCS § 5/15-1402.  Under a consent foreclosure a judgment must state that the mortgagee is waiving its right to a personal judgment for a deficiency against the mortgagor, but notice must be given to other lien holders who in turn would have the opportunity to object.  At that point the business realities of the particular parties’ position would take hold.  A mechanic’s lien clamant, for example, may wish to roll the dice; other parties may wish to have the amount necessary to redeem the property established consistent with the provisions of the Mortgage Foreclosure Act.

D.    Remedies

If the parties fail to negotiate a suitable resolution of the loan workout in a consensual manner, the lender may exercise other remedies available to it.  After all, the forbearance agreement (if one has been negotiated and signed) has cleared the path for the lender.  Remedies may include court actions on the collateral such as the following:

• Mortgage Foreclosure. A foreclosure seeks title to the property and, in the interim, may capture cash generated from the property through the appointment of a receiver.
• Replevin. A replevin action seeks court assistance to obtain physical turnover of personal property collateral such as machinery, equipment or inventory.
• Note Actions or Guaranty Actions. Conventional lawsuits seeking to recover personal judgments against either the borrower or any guarantor.

Alternatively, lenders may have other remedies available that do not necessarily require court action.

• UCC Sale Under Article 9 of the Uniform Commercial Code. The secured lender which has possession of personal property can offer that property for sale either at a public or private sale consistent with the terms of the Illinois UCC 810 ILCS 5/1-101 et seq.  Note that if the lender does not have possession of that collateral, it will have to file a replevin action in order to demonstrate its possessory right in that collateral (presumably granted in the loan documents) so that it can then physically dispose of the collateral through the UCC sale.
• Setoff Against Accounts; Direct Collections. Accounts that the debtor/borrower maintains with the lender, assuming the lender is a bank or other institution where the borrower can maintain accounts.  In an asset based loan or other loan facility where accounts receivable are collateral, a properly drafted loan agreement should give the lender the right to contact the borrower’s customers directly in order to collect accounts receivable.  Lenders should be cautious and seek counsel, however, before exercising rights under an assignment of rents.  Case law is contradictory on the subject and, depending on the circumstances and the documents, it may be necessary to commence foreclosure and obtain a receiver before seeking to collect rents.
• Cash Management Accounts. Finally, a lender with the capability of maintaining demand accounts for its borrower may have cash management agreements in place that give it the right to attach accounts for entities related to the borrower.  A borrower who has entered into such a cash management agreement in order to avail itself of some cost savings or interest payment from its cash balance may be surprised to learn that the accounts of its affiliates which are not parties to the loan in workout, are nonetheless in jeopardy.

This list of remedies is by no means comprehensive.  Indeed, the subject of remedies provides enough material for law school courses let alone a small portion of a one day seminar.  Simply put, the lender is not limited to the remedies available under the applicable loan documents.  Those remedies are supplemented by the common law and the applicable statutes, as well as the fertile imagination of its counsel.
E.    Lender Liability Issues

Nonetheless, there are limits to such creativity.  A lender cannot exercise its remedies or take other actions against the borrower or the collateral, oblivious to any and all consequences.  Another benefit of a well drafted forbearance agreement executed by all parties lies in the fact that lender liability claims predating execution of the forbearance agreement presumably have been waived.  This means that the window of exposure is thus limited to the time that the forbearance agreement was “live,”  essentially the forbearance period.
Absent the benefits of a forbearance agreement, the lender’s exposure has been drastically diminished by the passage of the Illinois Credit Agreements Act, 815 ILCS 160/1 et seq.  That Act provides, in pertinent part:
“Sec. 2. Credit agreements to be in writing. A debtor may not maintain an action on or in any way related to a credit agreement unless the credit agreement is in writing, expresses an agreement or commitment to lend money or extend credit or delay or forbear repayment of money, sets forth the relevant terms and conditions, and is signed by the creditor and the debtor.”

The passage of this statute effectively ends claims that a particular banker had verbally waived defaults or enforcement or other rights available to the lender.  In bygone days it was not unusual to expect the banker who initiated the loan also to collect the loan.  The words of that banker while he or she was courting the client (“This is just a document we need for our files, we would never enforce it”) could come back to haunt the lender.  Thus, the Credit Agreements Act.  Agreements to extend credit and modifications to those agreements must be in writing and must be signed by both parties.  Case law is highly supportive of this premise.
More complex bases for lender liability also have arisen where lenders become more “hands on” in the workout process.  For example, a lender who makes decisions as to which checks to honor and which checks to bounce is creating a dangerous precedent and the bases for defense to enforcement action on the underlying debt.  Likewise a lender directing the borrower as to which personnel to retain and which personnel to terminate is also courting risk.  A sophisticated lender has developed mechanisms that reduce or eliminate such exposure.  For example, the establishment of a budget may be done independently of any forbearance agreement.  A lender can agree to fund the borrower’s operations consistent with the terms of an agreed budget.  To be effective as a bar against claims, the budget must be honored by the lender.  Thus, if the borrower is performing the lender should fund.  Alternatively, if the borrower exceeds the parameters of the budget, the lender should take the difficult step of dishonoring checks or cutting off cash, lest it be charged with a course of dealing that negates the benefits created by the creation of a budget.
Lenders also may face problems with the involvement of third party professionals.  A lender, for example, may be dissatisfied with its real estate borrower serving as the property manager because of the attendant risk that rents are being deferred and expenses are not being paid properly.  A condition of the forbearance agreement or simply as part of the negotiations over the troubled loan, the lender could seek replacement of that property manager with an independent third party.  Prudence dictates that that third party not be affiliated with the lender.  Best practices would be that the lender either designates three acceptable alternative property managers or that the lender and borrower agree to a new manager in an arm’s length negotiation.  The same considerations would hold in the event the lender felt that a turnaround professional or consultant was in order.
As noted, experienced lenders have developed mechanisms and procedures to avoid lender liability issues such as these.  In today’s world, though, the universe of lenders have expanded so that a non-conventional lender (be it a fund or a “hard money” lender) may be tempted to take shortcuts that could create exposure.
Finally, remedial statutes such as the Illinois Interest Act, 815 ILCS § 205/0.01 et. seq. and the Illinois Consumer Fraud Act, 815 ILCS § 505/1 et. seq. may pose traps for unwary lenders.  Specifically, the Illinois Interest Act imposes penalties on a lender who “contracts for or receives…unlawful interest” 815 ILCS § 205/2.  If a lender has inadvertently misapplied payment, for example, so that default interest was prematurely charged, the consequences could be severe.  The Illinois Interest Act provides for damages equal to twice the amount of interest charged plus attorneys’ fees.  Id.  To compound matters, the Illinois Consumer Fraud Act itself may be breached by violations of the Illinois Interest Act (see, 815 ILCS § 505/2).  Such claims perhaps may have been waived in the forbearance agreement.  On the other hand, a lender’s misapplication of funds could occur at any time creating technical defenses and indeed counterclaims that could be used as leverage in negotiating a potential resolution of matters.
F.    Receivership

A lender in a commercial real estate transaction where the underlying real estate is generating cash almost invariably seeks to have a receiver appointed shortly after it commences its foreclosure proceedings.  A receiver adds a layer of expense, but typically lenders will gladly bear the expense in exchange for the benefits a receiver provides.  A proper and professional receiver will collect rent and pay bills consistent with a statutory scheme established under the Illinois Mortgage Foreclosure Act, 735 ILCS 5/15-1704.  A receiver benefits the lender in two ways:  making sure that certain bills are paid; and choking off cash flow to the borrower who may have been diverting rental collection for other bills it needed to pay.  Nonetheless the  receiver is an officer of the court and must exercise its own judgment.  A receiver’s focus should be the maintenance of the property.  Note also that in the priority of payments, paying the underlying mortgage is relatively low on the list and may only be done, assuming that there is sufficient excess cash, with a court order.

G.    Pursuit of Guarantors

A well drafted guaranty will give the lender the option to pursue the guarantor regardless of whether or not it is pursuing the borrower or the collateral.  Thus, the lender blessed with a cash rich guarantor may simply approach that individual, identify the exposure that individual is facing and ask for a check.  Should the guarantor, flush with cash, refuse to voluntarily pay, the lender can point to a superbly drafted guaranty where that guarantor has waived any number of rights and defenses available to it under the common law, including the lender’s obligation to pursue other parties first, to provide notice and in general to give the guarantor a break.  Failing that, the guarantor’s legal defense such as the breach of the so called covenant of good faith and fair dealing have been discarded long ago (see, e.g., Martindell v. Lake Shore Nat. Bank, 154 N.E. 2d 683 (1958)), a check should be forthcoming.
In the real world, however, matters are more complex.  Commonly the guarantor is the principal behind the borrower.  From an underwriting perspective, one of the reasons a lender obtains a personal guaranty is to ensure that it has the full attention and commitment of the individual behind the corporate borrower so that that person is engaged in the borrower’s operations and has incentive to satisfy the lender’s requirements.  In a work-out setting, such expectations may be turned upside down.  A lender who places an extraordinary amount of pressure on the guarantor may prompt that guarantor to file a personal bankruptcy and walk away from any operational responsibility, in essence leaving the lender holding the bag.  Thus, it is not unusual for the lender and the borrower to set aside the issue of the guaranty to the end.  A borrower who has cooperated with the lender and obtained the maximum amount that the lender can hope to recover from the distressed situation, creates a setting where a lender will be more accommodating to the guarantors.

Perhaps that conversation is held at the beginning of the workout transaction.  After all, it is not uncommon for a significant portion of the guarantor’s net worth (if not all of it) to be tied up in the business that is the borrower.  With the borrower failing, the business realities of pursuing the guarantor may not be appealing.  Nonetheless, the guarantor may wish to avoid a bankruptcy filing.  Thus a truce is reached:  the borrower and its guarantor/owner cooperates with the lender to the full, maximize the value from the collateral in return for the lender declining to pursue the guaranty.

Analogous considerations are in place in the event of a deficiency judgment from a mortgage foreclosure.  If the borrower’s principal (i.e., the guarantor) tossed the keys and walked away from the project, a lender may wish to make an example.  The lender’s ability to make that example, however, may be hampered if the deficiency judgment that it obtained is excessive or improper.  Particularly in the current economic environment, foreclosure judges are paying greater scrutiny to the bidding process at mortgage foreclosure sales.  A lender preparing to credit bid at such a sale is best advised to have an appraisal for underlying real estate in hand in anticipation of such bidding.  While a lender may perhaps contend that it should not bid full appraised value for a property, again it should be armed with a rationale for its bid.  If, for example, the underlying mortgage is $750,000 and the lender has an appraisal for $700,000, perhaps a bid less than $700,000 may be justified by reducing that appraised value by a future brokerage commission, projected real estate taxes, insurance and other expenses that may be directly attributable to the property and some aspect of a cost of carry.  Nonetheless, under this scenario a credit bid of $200,000 or $300,000 (with the commensurate deficiency in the $500,000 range) would not be accepted by most (if not all) Cook County judges sitting on the mortgage foreclosure call.  The safest bid would be an appraised value.  Anecdotally, some judges will only accept the appraised value as a proper credit bid.  The deficiency judgment issue is a moving target.  A lender that seeks to obtain and enforce a deficiency judgment should be scrupulous in developing its bidding strategy.

Lawyers work together to save company, successfully sell it – Chicago Daily Law Bulletin – April 4, 2010

Konstantinos Armiros

On March 18, Arnstein & Lehr Chicago Partner Konstantinos Armiros (left) received a significant result for his client, a major 100 year old lumber retailer, that was victimized by the real estate market collapse.  Recently a private equity fund agreed to buy the company but the bank would not allow the lumber company to go through a formal bankruptcy in order to expedite the sale free of creditor claims. Instead, the lumber company proceeded with an assignment for the benefit of creditors to accomplish the same thing.  Mr. Armiros represents the assignee who essentially is acting as a bankruptcy trustee.

The assignee set up a sale through an auction process with the private equity fund serving as the “stalking horse” – namely the first bidder who sets a minimum value.  The sale was to occur Wednesday, March 17.  Meanwhile the buyer also lent money to the company so it could keep its doors open and continue operating.  No other buyers have materialized.  On Monday evening, March 15, five small trade creditors filed an involuntary bankruptcy proceeding – putting a halt to the process.  Because the buyer had been lending  to the lumber company to pay for its operating losses, they made it very clear that if the bankruptcy was not resolved, they would not be a buyer.  That would mean operations would cease and 150 people would lose their jobs the very next day.

On March 18, Mr. Armiros and his team of Mimi Stein, George Apostolides, and Kevin Morse conducted a three hour emergency hearing (essentially a mini-trial with three witnesses on two hours notice).   Ms. Stein and Mr. Morse wrote the brief on four hours notice and Mr. Armiros and Mr. Apostolides tried the case.   As a result, the bankruptcy judge declined to accept the case as a bankruptcy and dismissed the case.  Because of this significant victory,  the lumber company remains in business, all the employees received a paycheck on March 19, and the sale of the business will close shortly.

Chicago Partner Dino Amiros is featured in an article written about the firm’s new Commercial Solutions Service Group which appeared in the June 18th issue of the Dow Jones Daily Bankruptcy Review. The article appears in the “Mover of the Week” section on page 9.

Click here to download the pdf.

Olivia Clark from Chicago Lawyer interviewed Dino Amiros and Samuel Levine for her profile of the Commercial Solutions Service Group which appeared in today’s posting on the “Around the Water Cooler” blog.  The blog is part of Chicago Lawyer Magazine’s web site and cover’s legal news in Chicago.  To read the story go to:

http://www.chicagolawyermagazine.com/2008/07/10/around-the-water-cooler-commercial-solutions-service-group/

The Service Group is comprised of highly experienced attorneys from its offices in both Chicago and Florida, who work in a variety of legal disciplines including Arnstein & Lehr’s Banks & Financial Institutions; Bankruptcy & Creditors’ Rights; Condominium & Community Associations; Construction; Litigation; Real Estate; and Tax Practice Groups.

Click here to read the article.

For more information on the group and its services, please contact Dino Armiros at (312) 984-6664 or karmiros@arnstein.com.

Arnstein & Lehr LLP recently announced the formation of its Commercial Solutions Service Group to assist clients in navigating the increasingly complex legal issues that have emerged in connection with situations of financial distress in today’s economy.

The Service Group is comprised of highly experienced attorneys from its offices in both Chicago and Florida, who work in a variety of legal disciplines including Arnstein & Lehr’s Banks & Financial Institutions; Bankruptcy & Creditors’ Rights; Condominium & Community Associations; Construction; Litigation; Real Estate; and Tax Practice Groups.

“The formation of this group is not an attempt to provide lip service to an emerging business opportunity as we have witnessed law firms do so often in the past,” said Dino Armiros, partner with Arnstein & Lehr and Chicago co-chair of the new Service Group. “Rather, this Service Group is a reflection of the complex business issues facing companies and financial institutions in today’s economy. Clients increasingly require legal counsel that understands the intersecting spheres of decisions and considerations that exist when faced with a foreclosure or other financial hardship. This Service Group is designed to appreciate those challenges and help clients both protect and maximize the value of their assets in a contracting economy.”

The new Service Group anticipates aiding clients in a variety of situations, including:

• Banks weighing their legal options when faced with the possibility of taking over management of a property that is partially-built
• Builders and developers facing construction issues and financial difficulties as a result of the housing collapse
• Protecting contractors with enforcement of mechanics’ liens on real estate
• Counseling condo associations whose funding has been impacted and limited by foreclosure proceedings
• Aiding lenders and borrowers in avoiding lengthy Chapter 11 proceedings
• Navigating the myriad tax concerns that emerge during workouts
• Aiding retailers and landlords of retail properties during bankruptcy proceedings

“In many ways, banks, contractors, landlords and other organizations have entered uncharted territory in this economy,” explained Samuel Levine, the group’s other chair. “This Service Group is designed to help companies explore every option and opportunity as opposed to the traditional ‘silo’ approach in which every problem requires the same solution. Today’s volatile market conditions present unique situations that require unique and creative legal solutions.”

For more information on the group and its services, please contact Dino Armiros at (312) 984-6664 or karmiros@arnstein.com.

Konstantinos (Dino) Armiros, a partner with Arnstein & Lehr and also one of the practice group’s chairs, said the firm’s significant bankruptcy and restructuring expertise is invaluable in conducting an analysis of repurchase contract obligations. “The mortgage industry is in crisis and Arnstein’s depth in advising companies in distress and financial services organizations places us in the right place at the right time,” he said.

Attorneys within the group have more than 30 years experience in representing banks and distressed companies. The group will offer sophisticated analysis of regulatory and other statutory obligations of the mortgage originator or lender and will also provide creative strategies to assess potential exposure, including possible criminal liability. They will also assist and represent acquirers of entities, including securitized pools, which control or are liable for repurchase contracts to assure fair pricing and maximum value for their clients.