Capital Restructure Group
Restructuring Debt Without Filing Chapter 11
Capital Restructure Group (CRG) was formed to overcome the challenges of the restrictive
capital markets that confront real estate developers and investors today. We are
turnaround specialists who restructure and refinance debt through our own debt,
equity, and joint venture fund.
The Principals of Capital Restructure Group (CRG) have a collective 115 years of
real estate investment, development and finance experience and are experts in the
restructure of real estate debt through negotiating commercial real estate loan
modifications, note reductions and loan extensions. CRG utilizes the leverage afforded
by its knowledge of the Federal Bankruptcy System to apply pressure to the creditors
to renegotiate the terms of your loans, preferably without the need to file a chapter
11. In the event a chapter 11 should be filed, CRG is a chapter 11 bankruptcy consulting,
finance, and underwriting firm that consist of dozens of Associates statewide who
specialize in the real estate bankruptcy field. The costs of our services are a
fraction of those fees charged by attorneys, and we can save you tens of thousands
to hundreds of thousands of dollars in legal fees whether you file a chapter 11
or not.
Why CRG
The most common mistake a company makes when opening negotiations to restructure
debt is “turning the keys” over to the attorneys and having the negotiations run
by legal counsel. As experts in all facets of debt restructure and the techniques
to maximize the leverage over your lenders, CRG takes a front seat at the negotiating
table for you. If negotiations with your lender are initiated through attorneys,
you are paying your attorney to speak with the lenders attorney (whose bill you
are also paying) and you end up negotiating through very highly paid messengers.
It’s as if you are negotiating by voicemail.
Our experience is that lender’s attorneys have large retainers paid by a financial
institution and you end up fighting a counsel who has a printing press direct from
the mint that pays like clockwork. Lenders attorneys are predisposed to run up billable
hours and not surprisingly, they do just that.
CRG on the other hand goes direct to your lender’s business people without the need
for their attorney to be present and negotiates on your behalf. Ask yourself a simple
question: Would you have your attorney negotiate the acquisition of your property
for you or your construction or permanent financing for you? If the answer is no,
why would you turn the keys over to legal counsel to restructure your debt? CRG
directs the strategy of the negotiations as businessmen for businessmen: CRG has
excellent relationships with attorneys and is accustomed to interfacing with legal
counsel, streamlining the process and saving you time and money.
How do the negotiations work?
CRG has written hundreds of chapter 11 reorganization plans and we are experts in
the techniques utilized to make lenders negotiate the rational restructure of real
estate debt. Because we know the leverage, parameters and flexibility of chapter
11, we bring that knowledge with us to the negotiating table for your benefit prior
to any chapter 11 filing. The fact that in a chapter 11, a bank can have their debt
forcibly restructured over their objections (known as a cramdown) and can even have
their loan reduced to the present value of the real estate that secures the loan
(know as a stripdown) is a powerful advantage that property owners have over their
lenders and one that CRG thoroughly leverages in bank negotiations.
A bank or financial institution does not want you to understand the tools available
to you under chapter 11 reorganization. CRG knows these advantages and will utilize
the most effective methodology for you prior to any chapter 11 filing.
Does my property meet the criteria necessary for a successful restructure of my debt?
Each real estate project has a unique set of facts that may or may not work to your
advantage. In order to obtain a successful restructure, CRG analyzes each project
and can assist the client in structuring the facts to best leverage the lender.
What this means is that before any negotiations take place with your bank, we structure
a voting class (a voting class is a group of creditors that can approve a reorganization
plan that restructures your secured debt over the objection of your lender) and
utilize the fact that we can successfully restructure the secured debt through a
plan of reorganization to maximize the leverage over your bank and force them to
the table. In the event a chapter 11 should be filed, we have already pre-packaged
your creditors to assure a friendly vote when the time comes to approve a plan.
What else do I need to know?
The very fact that a bank can have their loan (often which is due) forcibly restructured
in-place over their objections affords opportunities to buy their note at a discount.
CRG exclusively underwrites loans for private funds specializing in financing real
estate projects that have filed chapter 11 or whose owners are credit impaired in
order to take out lenders who find themselves in the uncomfortable position of being
restructured. There is even more opportunity: Because in a chapter 11 a property
owner can petition the court to determine the present value of a real estate asset
and strip the secured loan down to the present value of the real estate, the court
can require the bank to reduce and to rewrite the existing loan at a 100% loan to
value.
The regulators treat this new loan as nonconforming and force the bank to
set aside reserves and reduce the loan on their books to 75% of the rewritten amount,
creating the negotiating leverage to cash out the bank at or near 75% loan to value,
thereby providing an opportunity to create equity.
To have CRG evaluate the options for restructuring your real estate loan, econtact
us by phone or e-mail
us the following information and we will contact you to discuss your project.
All information is kept in strictist confidence.
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Existing debt
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Property value
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Real Estate Taxes
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