Chapter 11 is expensive and not always the right tool,
particularly for a restructuring of a company with a broken balance
sheet, as compared to a business with a broken business model. We
have seen a significant uptick in out-of-court activity and clients
frequently ask us about foreclosure options. In this post, we
highlight a page in the foreclosure playbook — strict
foreclosure — and discuss its advantages and challenges.
Strict Foreclosure
Strict foreclosure is a secured creditor’s post-default
remedy. In its simplest form, strict foreclosure swaps debt
forgiveness for collateral ownership. Strict foreclosure is
sometimes called “friendly foreclosure,” because it
typically requires the consent (or, in some…
