Lim Ruger Completes Efficient Loan Enforcement for Community Bank

September 15, 2009 – Lim Ruger represented a community bank in formulating the most cost-effective creditor’s rights strategy in enforcing a debt secured by mixed collateral (real property and personal property assets of a car wash business located on the property), with personal guaranties from the two owners of the borrowing entity.  The matter involved a loan of approximately $7,500,000.  After due consideration of the available remedies, Lim Ruger transferred the non-performing loan to a single purpose entity owned by the bank and then guided the bank through a "unified" trustee’s sale of the real property and related personal property collateral.  The foreclosed assets then were immediately sold to a third party to recover a substantial part of the loan.  The deficiency was sought against the guarantors, resulting in a settlement with one of the guarantors for $850,000, and a full deficiency judgment against the other guarantor for $2.6 million. 

In completing the unified foreclosure, the bank overcame a number of obstacles with Lim Ruger’s assistance, including two successive bankruptcy filings by the corporate borrower to stay the foreclosure.  Lim Ruger successfully moved for an emergency order dismissing the second bankruptcy and prohibiting the borrower from filing any new bankruptcy for 180 days, paving the way for the unified sale.  The bank also obtained a TRO in state court prohibiting the borrower from removing, destroying and concealing the bank’s collateral pending foreclosure, and was able to negotiate a stipulated order requiring the borrower to surrender the foreclosed property to the bank, without the need for an unlawful detainer action to evict the borrower.  The attorneys involved were Samuel Oh (debt enforcement and bankruptcy) and Richard Kim (corporate and sale of assets).