Structuring International Loans to Minimize U.S. Bankruptcy Risk

Problem:

A U.K. real estate lender client wanted to finance purchase of a Scottish office building with the British Crown as the chief tenant. The borrower was a Delaware limited partnership; the lender feared U.S. Chapter 11.

Solution:

In loan document modifications, the borrower acknowledged that the U.S. was an inconvenient forum, that all creditors of the partnership were to be located in the U.K. and that Debtor would not object to dismissal of any U.S. Chapter 11 as a bad faith filing in an inconvenient forum. Borrower provided an affidavit in support of a motion to dismiss and consented to arbitration of any disputes in the U.K. including lender liability disputes. The documents materially reduced, but did not eliminate the risks of U.S. Chapter 11.