How to Stop a Business Foreclosure
A business that owns real estate facing foreclosure is in a challenging situation. There are, however, options available to avoid a business foreclosure. By taking a proactive approach to preventing a foreclosure, a business has a solid chance of maintaining ownership of real estate essential to its operations.
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Instructions
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Negotiate a loan modification with the mortgage lender. Many mortgage lenders are interested in negotiating loan modifications on commercial properties. By agreeing to a loan modification, a mortgage lender saves itself the time and expense of pursuing a foreclosure action.
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File for bankruptcy. Failing to obtain a loan modification, the next step to take in order to stop a business foreclosure is to seek bankruptcy protection. Select a Chapter 11 bankruptcy. A Chapter 11 bankruptcy allows a business the ability to continue operating. A business in Chapter 11 is provided the chance to reorganize its debt, including a mortgage loan facing foreclosure.
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Obtain substitute financing. Another option available to a business while in Chapter 11 reorganization is to apply for and obtain new financing. One method of dealing with a mortgage loan otherwise facing default is to obtain a substitute mortgage loan. A new lender will be interested in such an agreement because it will be given priority over other, older lenders pursuant to bankruptcy laws.
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Tips & Warnings
Stopping a business foreclosure is a challenging endeavor. A business facing foreclosure on commercial real estate needs to consider engaging the services of a well-qualified and experienced real estate attorney.
