Banks continue to see an increase in delinquencies on commercial real estate (CRE) loans as interest rates continue to rise and work-from-home policies create empty workspaces. As demand for office space decreases, borrowers have begun to default on their loans, forcing banks and lenders to sell their loans at significantly lower rates or engage in other potentially costly and time-consuming workouts. In reports for the third quarter of 2023, many banks show significant losses, largely due to CRE loans. Morgan Stanley reported setting aside $134 million for credit losses, stating that this was primarily due to “deteriorating conditions in the commercial real estate sector,” according to an article from Yahoo!, Other institutions, like Bank of America, have reported that their loans increased as well. Bank of America’s nonperforming loans increased to nearly $5 billion in the third quarter from $4.27 billion in the second quarter. They attributed this increase to…
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Small business bankruptcy filings are increasing, likely a result of the Federal Reserve’s increased interest rates as well as higher operating costs and stricter lending standards. Small-business owners received a decent amount of help during the pandemic through various government programs. However, as many of these programs come to an end, small businesses are feeling the impact in a big way. In a more challenging time to navigate these circumstances, small businesses, by their general nature, operate on thinner profit margins and smaller cash reserves than do larger corporations. According to a report from the Wall Street Journal, this has led many small businesses to file for bankruptcy under Subchapter V, a newer provision in federal bankruptcy code that makes it easier for financially struggling businesses to restructure. Put into effect in February 2020, Congress created Subchapter V, as standard Chapter 11 bankruptcy filings were far more expensive and restrictive…
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In the aftermath of Yellow Corporation filing for bankruptcy, The Kansas City Business Journal recently interviewed Sader Law Firm Managing Member Neil Sader, who gave his perspective on the key elements to consider in the upcoming proceedings. In the article, titled “4 key issues in Yellow bankruptcy that veteran attorney Sader is tracking,” Sader provides insight into the ripple effect that Yellow Corp. closing its doors will create in the coming months. Yellow Corporation closed its doors in early August with 100,000 creditors owed, $2.15 billion in assets and $2.59 billion in debts. Sader spoke to four main categories related to Yellow Corp.’s bankruptcy: cash collateral, the “stalking horse bid,” the court’s actions, and other ongoing legal action. “The court’s perspective is to try and maximize the estate and do it in a fair and equitable way,” Sader said in part. “The court’s first priority will be to ensure that…
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