Closing the Door on Bankruptcy with Bankruptcy Remote Entities

Your bank client is ready and willing to lend funds as part of a commercial real estate transaction. However, the lender wants to protect against the risk that the borrower subsequently files for bankruptcy and is substantively consolidated with the borrower’s affiliates. You suggest using a bankruptcy remote entity.

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Related Content

• Borrower as a Single Purpose Entity
  Read this discussion of a borrower as a single purpose entity that holds single asset real estate.

• Bankruptcy Remoteness in Securitization
  Read about structuring an entity as a bankruptcy remote entity in securitization transactions.

• LLCs and Bankruptcies
  Review this practice note for a discussion of LLC and member bankruptcies, structuring LLCs as bankruptcy remote entities, and drafting the operating agreement to address bankruptcy issues.

• Non-Consolidation Opinion
  Start with this template when drafting an opinion that the borrower's assets and liabilities would not be substantively consolidated with those of related entities where the borrower will be established as a special purpose entity.

• Substantive Consolidation
  Check out a discussion of substantive consolidation in Chapter 11 cases.

• Bankruptcy Transactional Resource Kit
  Refer to this resource kit for Practical Guidance materials on handling transactional matters in bankruptcy cases, including detailed practice notes, templates, and checklists.

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