Bankruptcy Remote Entities in Commercial Real Estate Transactions

Summary

This practice note discusses the use of bankruptcy remote entities as borrowers in commercial real estate financing transactions. This note addresses the various types of bankruptcy remote entities and explains how they are created and how they differ. Further, this practice note examines certain standard "separateness" provisions that appear in bankruptcy remote entities' formation documents that factually help the bankruptcy remote entity distinguish itself and its business from its affiliates. Finally, this practice note discusses how independent and blocking members are added to borrowers' management structures to create an additional layer of bankruptcy remoteness.