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Dechert 4 Real is a new podcast from Dechert LLP exploring the latest trends and developments in commercial real estate finance.
Join co-hosts Jon Gaynor and Sam Gilbert every month as they delve into current issues impacting both the legal and business aspects of real estate finance transactions, including lending, securitization and restructuring. Each episode features market commentary and interviews with industry thought leaders, providing listeners with valuable insights and practical advice, plus a little banter along the way.
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Latest Episode: Episode 23 – Financial Restructuring “Hot Takes” and Legal Practice Origin Stories
May 27, 2025 – Looking for a primer on the top-of-mind terms and topics in bankruptcy matters today? Dechert 4 Real has you covered as hosts Jon Gaynor and Kate Mylod sit down with David Herman, partner in Dechert’s financial restructuring group, to highlight his “hot takes”/hot tips on the space, including thoughts on substantive consolidation, automatic stay, prepackaged bankruptcy and more! Plus, Dechert partner Lindsay Trapp gives the 411 on recent developments in blind pool ratings and the hosts reveal their superheroic legalorigin stories!
Show Notes
- For more information on blind pool ratings, email ratedfundsteam@dechert.com.
- THE CRED Convos video series
Key Takeaways:
- Substantive consolidation is an equitable remedy by which a bankruptcy court may combine the assets and liabilities of distinct corporate entities so that the creditors of those entities share from a common pool of assets rather than each creditor recovering only from its respective debtor. This can simplify complex cases but may reduce recoveries for creditors of entities that have more assets relative to their liabilities. Commercial real estate lenders whose loans are non-recourse often seek to mitigate the risk of substantive consolidation to avoid their collateral being used to benefitcreditors of other corporate entities.
- The automatic stay takes effect upon the filing of a bankruptcy petition and stays all actions against the debtor or its property, including any lawsuits, foreclosures, debt collections, or perfection of liens. The stay provides breathing room for the debtor and the bankruptcy court to conduct an orderly reorganization or liquidation so as to maximize the value of the debtor’s assets and distribute them equitably to creditors. Violations of the stay can result in sanctions. Creditors have the right to move for relief from the automatic stay to pursue non-bankruptcy remedies or to seek a “comfort order” that the stay does not apply to a particular enforcement action.
- A prepackaged bankruptcy (prepack) involves filing for bankruptcy with a restructuring plan that has already received the required acceptance from creditors. This is distinct from a bankruptcy that is merely “pre-arranged” or “pre-negotiated,” meaning that the terms of a plan have been agreed to by the debtor and some of its principal creditors, but the plan has not yet gone through the formal solicitation and acceptance process. A prepack reduces the time, cost, and uncertainty associated with traditional Chapter 11 cases, but still provides benefits of the bankruptcy code such as the automatic stay and discharge of claims that arose before the bankruptcy. Prepackaged plans remain subject to objection by parties-in-interest in the bankruptcy case.;
- A fraudulent transfer is a transfer of a debtor’s assets before the filing of a bankruptcy case that may be “avoided” or unwound under two sets of circumstances. The first is where there has been “actual” fraud, meaning a transfer of a debtor’s property or interest in property that was conducted with intent to hinder, delay, or defraud creditors. The second is a so-called “constructive” fraudulent transfer, which occurs when a debtor transfers an interest in property at a time that it is insolvent and receives less than “reasonably equivalent value” in return.
- A preference is a transfer of property to a creditor on account of an existing debt that is made in the lead-up to bankruptcy and results in the creditor receiving more than it would in a liquidation. The preference period is the time during which such a transfer may be “avoided,” or clawed back, and refers to the 90 days prior to the filing of the bankruptcy petition or, in the case of an insider of the debtor, one year before the filing. A preference does not require a showing of actual or constructive fraud but instead is meant to ensure that all creditors are treated equitably, preventing the debtor from favoring certain creditors over others in the months or year before a bankruptcy filing.
- Recharacterization is an equitable remedy by which a bankruptcy court may “recharacterize” debt as equity in circumstances where the substance of the financial transaction more closely resembles that of an equity investment even if it is structured as debt. Debt has a higher priority than equity in bankruptcy, such that having debt recharacterized as equity has the effect of subordinating the recoveries of the debtor’s counterparty to those of other creditors.
About Dechert's Global Finance Practice
Dechert’s global finance practice provides a responsive, interdisciplinary, multi-jurisdictional team to address the complexities of modern finance transactions across categories and geographies. With more than 200 lawyers in the world’s major financial centers, our internationally recognized practice provides clients with innovative deal structuring, creative financing strategies and efficient execution. Our clients receive comprehensive solutions for all of their finance needs. By tapping into the breadth of Dechert’s expertise, we deliver advice on fund finance, real estate finance, structured finance, leveraged finance and securitization matters.
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