April 2009
K.C. McDaniel (K.C. McDaniel PLLC) examines why hotels fail
PLI: You point out the rising levels of default in hotel loans. You suggest that
the most common reason proffered for hotel failure is market failure — that the
market cannot support the particular business. You also consider this the least
accurate explanation for failure. Why and what usually explains hotel failures?
K.C. McDANIEL: In any downturn, hotels already under stress for other
reasons will be the first to fail. An accurate explanation for any hotel failure
is usually much more complex than simple market deterioration. Rarely is a hotel
so poorly planned and developed that there is absolutely no potential market
that will support the hotel through changing conditions. If another hotel is
operating successfully in the same market, then "market failure" is unlikely to
be either the correct or complete explanation. Some underlying factor or
combination of factors is causing the distressed hotel to fall short of its
market potential. A more likely and more complete explanation for failure is
"lack of alignment" or conflict of interest between the investor and those
operating and controlling the hotel day to day. In a downturn any conflict about
who gets the available dollars is more apparent. Here, the ultimate goal of
adequate return on the investment for the owner is not being met because the
available dollars are going somewhere else.
Continue reading "K.C. McDaniel (K.C. McDaniel PLLC) examines why hotels fail "
Paulette Brown (Edwards Angell Palmer & Dodge LLP) assesses the impact of the economic downturn on law firm diversity programs
PLI: Is there concern that progress on diversity in the legal profession will be
a victim of the economic downturn?
PAULETTE BROWN: Diversity
professionals are no doubt facing the most challenging times in their careers.
Everyday there is a new news story concerning the negative impact on law firms
that the current financial crisis is having. It is not only in the traditional
legal publications, but main stream media has taken an interest in this
phenomenon as well. Each day the issue becomes, not which law firm will announce
layoffs, but how many.
Collateral Haircut
Amount subtracted from the market value of an asset that a lender will not accept as collateral for a loan
Continue reading "Collateral Haircut "
In The
The Spring:
Successful International Arbitration Goes Français
Did you ever spend an entire grade school period insisting, against the
assertions of your teacher and a couple brainiacs, that the above title reads "I
love Paris in the spring"? Yeah, Toolbox, too. Could have used an arbitrator
that day—would have saved Toolbox detention time for punching Pierre
Smarty-Pants for mocking those of us who couldn't figure out the little
psychological game of expectations. Toolbox has since visited Paris in the the
spring, and it's quite delightful. Apparently, the international arbitration set
feels likewise because they're taking up all the good hotel rooms these days.
And why shouldn't they? Not only is arbitration one of those words that is
spelled the same in French as in English, but apparently the French arbitration
system is as good as a fresh croissant.
How Much Is That
Whenever Toolbox International (yeah, we're going global) wants new subscribers, it looks for databases to mine. Of course, lawyers comprising a relatively small group, Toolbox doesn't have many to plunder. And don't worry, Toolbox doesn't sell your name to anybody. (OK, maybe we sell your phone numbers, but no names—just kiddin'.) If there's one thing in this world that is inviolate, it's the secret Toolbox subscriber list. Then again, since this rag is going on seven years at no charge, Toolbox isn't certain anyone would want the subscriber list, unless they want a list of the best lawyers on the planet. (That was a required suck up.) Anyway, were Toolbox ever to entertain the notion of selling its bits and bytes, it wouldn't have the foggiest notion of how to limit usage, protect you or even how to charge. Apparently it's not as simple as just buying a pad of receipts from the Office Depot. Toolbox knows that from perusing today's first download.
HQ Gets An Environmental Makeover—Carbon Credits And Green Building
The CC thinks this is a first. In six years, nothing real-estate related has
made it to the newsletter. That's understandable, given the corporate bent of
these pages, but corporations build buildings and lease space in them, and a lot
of those buildings are becoming greener, either by choice or by mandate. It's
the latter we're concerned with here. And if the President's plans for Cap and
Trade come to fruition, the builders counsel among you may become a regular CC
focus. In that context, CC may well come to stand for "carbon compliance."
While the President hasn't unveiled his plan yet, generally speaking cap
and trade systems create a compulsory approach to lowering atmospheric emissions
by limiting the amount of greenhouse gases industry may emit ("cap") and by
permitting those companies that exceed their allotment to purchase excess
emissions from the government or on a market created for companies that are
under their allotment ("trade"). So let's say your client is building a
100-story, green edifice to company greatness (to do this you have to assume
away current economic woes that have put a crimp on high-rise construction); how
does the carbon credit impact the elevator ride to the top?
Continue reading "HQ Gets An Environmental Makeover—Carbon Credits And Green Building "
Tara L. Goodwin (Edelman, Combs, Latturner & Goodwin, LLC) assesses the impact upon consumers of the demise of TILA rescission class actions
PLI: Is the Demise of TILA Rescission Class Actions Harmful to Consumers?
TARA L. GOODWIN: Given the fact that lenders often commit the same
violations of TILA repeatedly in their documents, once one consumer has
established that a certain practice violates TILA and permits the consumer to
rescind, other consumers will benefit from that ruling, and should be able to
successfully rescind their own mortgages.
Tara L. Goodwin (Edelman, Combs, Latturner & Goodwin, LLC) reviews the Seventh Circuit's decision in Andrews v. Chevy Chase Bank (7th Cir. 2008).
PLI: Can you assess the impact of the Seventh Circuit's decision in Andrews
v. Chevy Chase Bank, 2008 U.S. App. LEXIS 20153; 545 F.3d 570 (7th Cir.
2008), on Truth in Lending Act (TILA) rescission class actions?
TARA L.
GOODWIN: Under §1635 of the TILA (15 U.S.C. §1635), a borrower whose principal
residence is used to secure an extension of credit, other than one for the
initial purchase or construction of the residence is entitled to rescind his
mortgage for certain violations of TILA, including failure to furnish the
material disclosures listed in 12 C.F.R. §226.23, n. 48,1 and failure to provide proper notices of the right to
rescind.2 When a mortgage is rescinded, the
creditor is required to remove its security interest from the property, and the
borrower must tender a reduced payoff amount, consisting of the principal, minus
all closing costs and all payments made. The borrower's payments are applied
entirely to principal. The reduction can be significant, with the Andrews
court noting that "a prevailing debtor with a typical loan can expect to receive
over $50,000, plus attorney's fees and costs, in a rescission action."
Andrews, supra, at *21.
Public-Private Investment Program (P-PIP)
Department of the Treasury program designed to facilitate partnerships between private investors and the government for the purpose of buying so-called "legacy" (formerly "toxic") assets.
Continue reading "Public-Private Investment Program (P-PIP) "
The Time To Set Aside Childish Things: On Being A New Partner
Toolbox didn't quite understand the President's inaugural exhortation to put aside the childish. The chattering classes took it as a broadside against petty bickering along party lines. Phew. Toolbox was concerned it meant that we should stop spending so much time on PlayStation 3 or Wii or, heaven forbid, avoid those false teeth toys that make you look like a vampire. Maybe the President meant something else altogether. Toolbox used to play with vampire teeth as an associate (but didn't bicker with fellow associates), which while not impacting the road to partnership, certainly didn't augur well for it. Though, come to think of it, if you can graduate to partner and wear vampire teeth without hurting the firm...well, either you're starring in Devil's Advocate or very talented. But let's assume (for argument's sake only) that your first action as a new partner isn't to rush off to the gag store. What exactly do you do now that you've officially left "childhood" behind?
Continue reading "The Time To Set Aside Childish Things: On Being A New Partner "
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