Commercial Real Estate: Tsunami Warning

I’ve written several times in the past (and as recently as May 24) about participation loans and disputes between lenders in a capital stack. On Friday the Dallas Business Journal reported a ruling on an intercreditor dispute in Dallas district court. Here’s the deal.

In 2006, when things were rosy, Nexbank of Dallas wanted to make a $50 million loan to Marcal Paper Mills. Problem: Nexbank could not take on a loan of that size by itself. So they syndicated the loan and sold participations. Orix took about $10 million of the loan. Marcal filed bankruptcy and Orix sued Nexbank. Last month a Dallas District Judge ruled in favor of Orix to the tune of $7.7 million. A link to the article is here.

As my May 24 blog suggests, this is the tip of the iceberg for this type of lawsuits about participation agreements. Contact me if you would like to discuss your rights as a participant or sponsor.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s