October 13, 2019

October 11, 2019

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Mortgage Holders Get a Boost

The Supreme Court's opinion in Radlax Gateway Hotel LLC, et al. v. Amalgamated Bank, which requires that real estate mortgage holders be permitted to credit bid up to the amount of its claim, will no doubt heighten interest in the "loan-to-own" strategy of purchasing debt to acquire the hotel. Through the court's opinion mortgage holders will now enjoy a greater degree of certainty in gaining control of hotel assets, particularly those having a value less than the mortgage holder's claim. Moreover, by giving the mortgage holders the right to credit bid, the court's opinion also works to limit the hotel manager's risk of "rejection" of the management agreement based in the manager's non-disturbance rights in the SNDA with the mortgage holder.

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About this Author

Michael Sullivan, Greenberg Traurig Law Firm, Orlando, Real Estate and Finance Law Attorney
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Michael J. Sullivan is Co-Chair of the firm’s Hospitality Group. Mike has wide-ranging experience in the acquisition, development, finance and disposition of hotels, resorts, branded residences and condo-hotels; management, franchise and operating agreements for hotels; publicly financed hotel management agreements; construction and permanent financings (balance sheet and CMBS); and the purchase of distressed mortgage debt instruments secured by hospitality-related real estate.

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