In search of the largest piece of a shrinking pie

By Pankaj Ladhar of Manos • Alwine P.L.

The commercial real estate sector in South Florida has certainly seen better times. While there is hope that the sector is poised to start a slow but steady recovery, this is of little help to those facing challenges today. Foreclosure and bankruptcy is an everyday reality for too many investors, commercial property owners and tenants. When a property runs into trouble no one wants to be left holding the bag.

But in bankruptcy and other situations in which there are simply no longer enough assets to go around, it is important to be pragmatic. Sometimes it may make sense to hold out for highest possible amount, while in other situations no amount of effort is going to increase the return. Recently a bankruptcy judge in Florida allowed competing plans to be filed in the bankruptcy case concerning a commercial property.

The Terra Group had wanted to acquire control of the Town Center at Doral. Terra had entered into an agreement with the property owners to attempt to satisfy the outstanding debts as well as finance the bankruptcy case. But this would have meant that the entities that had claims against the property would have received much less than the full amount that they were owed.

A large portion of the debt was owed to the community development district (CDD). The CDD is a government project which helps facilitate infrastructure improvements. The CDD objected to this plan because they said it would negatively impact their ability to fund future development projects. The judge has allowed the CDD to file a competing bankruptcy plan.

Source: South Florida Business Journal, “Judge throws wrench into Terra Group’s Doral plans,” Brian Brandell, Jan. 26, 2012