Bank Appears to Bail Out Their Own Interest

In a recent article published by the Birmingham Business Journal, the lender for the Capri Condominum project claims to have settled their debt from the borrowers who have filed bankruptcy. After reviewing documents filed with the Alabama Secretary of State, it appears like the filing members of the new owners, Capri Real Estate, LLC, is in fact the lender itself and one other bank. I am not sure if the other bank has been involved all along or not.

Anyway, it's never good news to have to go through the settlement process, but maybe the bank's new equity position will allow them to complete the deal and "truly" close the matters at hand. While they likely don't wish to be developers and prefer the position of comfort as the lender, the unfinished building is a worst-case-scenario. Think of it this way, the building fails to produce ANYTHING if it doesn't reach the stage of an issued C.O.

All in all, this is probably a common practice among lenders who have the misfortune of facing bankruptcy threatened deals and actually the better of few available options.

Hey guys, I'm just digging a little deeper than what was reported in the BBJ article. I hope you, like me, can have a little more knowledge to use in your projects.