The Real Deal New York

From the February issue: During the last major real estate downturn, in the early 1990s, New York developers frequently used bankruptcy filings to shield troubled assets from foreclosure. This time around, however, that haven may not be available. Changes to federal bankruptcy laws and a recent court ruling in New Jersey could have a major impact on how the collapses of the commercial and multi-family real estate markets play out in 2009. Mark Fawer, a partner in the real estate group of law firm Dickstein Shapiro, said developers have often used bankruptcy filings to delay the repayment of delinquent loans or to extract more favorable terms from a lender to prevent a property from going into foreclosure. “There are those borrowers who would use bankruptcy as just another delaying technique, as a last resort before a foreclosure sale takes place,” said Fawer. “There are others that would look to it as a tool to reorganize.”