Navigating Rescue Capital – A Strategic Option for Recapitalizing Distressed Entities

The real estate industry, particularly in the urban office sector, is suffering systemic shocks that have left many property owners in financial distress. This is a rolling phenomenon, which will accelerate as loans move towards maturity and rent rolls suffer from expirations. Rescue capital has been stockpiled to recapitalize these entities, in lieu of surrender to lenders or discounted sale by existing ownership.

This discussion covers the following from the perspective of existing ownership and the rescue capital investor:

• An analysis of “rescue capital,” the recapitalization of distressed companies on opportunistic terms;
• Key structures available to effect a rescue capital infusion;
• The benefits, challenges and issues of a rescue capital transaction and the legal and tax issues that must be addressed;
• The techniques and unique aspects of rescue capital that are applicable to distressed companies across industries beyond real estate; and
• The key tax issues and opportunities of both existing ownership and rescue capital investors.